kenya dairy sector competitiveness program (kdscp) annual report_2011

This publication was produced for review by the United States Agency for International

Development. It was prepared by Land O’Lakes

USAID KENYA DAIRY SECTOR COMPETITIVENESS PROGRAM

ANNUAL PROGRESS REPORT

OCTOBER 2010 – SEPTEMBER 2011

623-C-00-08-00020-00

Contractor Information:

Mulinge Mukumbu/Joseph Obado

Land O’Lakes, Inc.

P.O. Box 45006, 00100,

Nairobi, Kenya

Phone: 254-20-3748526 or 3748685

Fax: 254-20-3745056

October 28, 2011

This publication was produced for review by the United States Agency for International Development. It was prepared by Land O’Lakes, Inc.

3


ANNUAL PROGRESS REPORT

OCTOBER 2010 - SEPTEMBER 2011

623-C-00-08-00020-00

DISCLAIMER

The authors’ views expressed in this publication do not necessarily reflect the views of the United States Agency

for International Development or the United States Government.

i

CONTENTS

LIST OF TABLES ..................................................................................................................................................................... ii LIST OF FIGURES ................................................................................................................................................................... ii LIST OF ACRONYMS............................................................................................................................................................ iii 1.0 EXECUTIVE SUMMARY AND PROGRAM HIGHLIGHTS ....................................................................................... 1 2.0 INTRODUCTION AND OBJECTIVES ..................................................................................................................... 5 3.0 PROGRAM IMPLEMENTATION .............................................................................................................................. 7 3.1 COMPONENT ONE: ENHANCE CAPACITY FOR MILK PRODUCTION INPUT, QUALITY CERTIFICATION,

AND MARKET PROMOTION ............................................................................................................................................... 8 3.2 COMPONENT 2: DEVELOP DAIRY SMALLHOLDER BUSINESS ORGANIZATIONS ........................................ 19 3.3 COMPONENT 3: INCREASE AVAILABILITY OF DAIRY BUSINESS DEVELOPMENT SERVICES ........................ 31 3.4 ENVIRONMENTAL DEGRADATION MITIGATION MEASURES ......................................................................... 37 3.5 GENDER AND YOUTH INTERVENTION ............................................................................................................ 38 3.6 CHALLENGES ....................................................................................................................................................... 40 3.7 LESSONS LEARNED .............................................................................................................................................. 42 3.8 WORK PLAN FOR YEAR 4 – QUARTER 1 ........................................................................................................ 43 4.0 PERFORMANCE DATA TABLE ............................................................................................................................ 46 5.0 BUDGET EXECUTION ......................................................................................................................................... 50 6.0 ANNEXES ............................................................................................................................................................. 51 ANNEX 1: PROCESSORS REGISTERED IN THE E-PORTAL ............................................................................................... 52 ANNEX 2: RECOGNITION FOR PARTICIPATING IN DAIRY MASTER PLAN ................................................................. 53 ANNEX 3: LIST OF BENEFICIARIES OF KDSC PROGRAM ............................................................................................. 55

ii

List of Tables

Table 1: Exhibitors sponsored by KDSC ................................................................................................................... 17

Table 2: Productivity of milk in the year 2011 in Lts/cow/day ............................................................................. 26

Table 3: Cost of production - 2011 and cumulative program figures in KShs/litre ......................................... 27

Table 4: Proportion of farmers establishing fodder crops/trees .......................................................................... 27

Table 5: Gross Margins and household income: 2011 and cumulative program figures in Kshs/Liter ........ 28

Table 6: Household income: 2011 and cumulative program figures (Kshs/Month) ......................................... 29

Table 7: Artificial Insemination technology adoption in 2011 ............................................................................... 30

Table 8: Summary of beneficiaries accessing loans during year 4 ........................................................................ 34

Table 9: Work plan for Year 4 ..................................................................................................................................... 43

List of Figures

Figure 1: Director Livestock Production Mr. Kiptarus with his staff during a APSK field day at KARI

Kitale ..................................................................................................................................................................................... 9

Figure 2: Mr. Misosi from Surungai receive a digital weighing from Mr. Pascal of KDB ................................. 12

Figure 3: Chairman North rift AI Project Chairman Mr. George Kamau addresses participants during the

launch .................................................................................................................................................................................. 15

Figure 4: Kimani of Nakuru Simba Machinery receiving a certificate of attendance from the Minister for

Livestock and Fisheries Development, Tanzania ...................................................................................................... 17

Figure 5: KDSC Stand during Kenya Livestock Breeders Show ........................................................................... 18

Figure 6: A section of the farmers who attended the milk bulking meeting held at Kimnai trading center

on the 16th November 2010 in Marakwet west. .................................................................................................... 21

Figure 7: TransNzoia Coordinator, Mr. Isaac Kamau explains breeding techniques to the Kenya’s Prime

Minister, Raila Odinga (with a hat) .............................................................................................................................. 22

Figure 8: MilkahThiong’o, Manager Tulaga DFCS using her IT compliant coop works .................................. 25

Figure 9: Trend of uptake of fodder maize ................................................................................................................ 28

Figure 10: Beth Maina in her feed store on the right, while on the left is one of her dairy cows registered

................................................................................................................................... Error! Bookmark not defined.

Figure 11: Dr Odhiambo addresses technicians during the launch of NORAIPP ............................................ 33

Figure 12: Service Providers showing dairy farmers how to operate a chaff cutter ....................................... 35

Figure 13: Dairy farmers in the KDSC stand during the Breeders show ........................................................... 36

Figure 14: Dairy farmer showing his dairy cows during the show ....................................................................... 37

Figure 16:) .......................................................................................................................................................................... 38

Figure 17: Farmers during the launching of a biogas plant at Mr.Gichukis Farm (Gatangamilk shed) ......... 38

iii

List of Acronyms

APSK Animal Production Society of Kenya

BDS Business Development Services

CAIS Center for Artificial Insemination Services

DTA Dairy Traders Associations

DTF Dairy Task Force

DVO District Veterinary Officer

ESADA Eastern and Southern Africa Dairy Association

FHI Family Health International

GMP Good Management Practices

HACCP Hazard Analysis and Critical Control Points

HPI Heifer Project International

ICT Information Communication and Technology

IPM Integrated Pest Management

NKCC New Kenya Cooperative Creameries

KDB Kenya Dairy Board

KDSC Kenya Dairy Sector Competitiveness Program

KENDAPO Kenya National Dairy Producers Organization

KENFAP Kenya National Federation of Agricultural Producers

KLBO Kenya Livestock Breeders Organization

KSB Kenya Stud Book

LOL Land O’Lakes, Inc.

MBC Milk Bulking Center

MOLD Ministry of Livestock Development

MOLD (DVS) Ministry of Livestock, Department of Veterinary Services

MWG Milk shed Working Group

NEMA National Environment Management Authority

NGO Non-Governmental Organization

PCPB Pesticide Control Products Board

PERSUAP Pesticide Evaluation Report Safer Use Action Plan

PMO Pasteurized Milk Ordinance

PMP Performance Management Plan

RMC Resource Mobilization Centre

SBO Smallholder Business Organizations

SoW Scope of Work

SITE Strengthening Informal Sector Training and Enterprise

SNV Netherlands Development Organization

SPs Service Providers

USAID United States Agency for International Development

WRUA Water Resource Users Association

WWS World Wide Sires Consortium


1.0 Executive Summary and Program Highlights

This report summarizes the key activities implemented and the associated accomplishments for the

USAID Kenya Dairy Sector Competitiveness (KDSC) program. The report covers the fourth year

(October 2010-September 2011)1 of the project. The KDSC program activities contribute to the

achievement of intermediate results under USAID/Kenya Mission’s SO7 on ―Increasing Rural

Households Income.‖ To implement the program, Land O’Lakes employs a market-driven value chain

approach, utilizing a Business Development Services (BDS) methodology.

During Year 4, KDSC realized significant achievements as it continued to address sector challenges,

constraints, and stakeholder concerns in the targeted milk sheds. The program reached a total of 42,977

households during the year and benefiting 248,275 households cumulatively since the inception of the

project. This shows that the project has reached 99 percent of the beneficiaries in this period. Incomes

in the dairy sector have also increased. The income realized from dairy was Kshs. 5,199.65 per month

during the period under review. Cumulatively this results in an increase of about 154 percent compared

to baseline and surpassing the target increase of 60 percent by the end of Year 4. In addition during the

fourth quarter, KDSC helped industry stakeholder organizations respond to surplus milk supply and

price pressure challenges resulting from the significant increase in milk production in the recent

quarters. Selected highlights for program activities and results during the year are included below.

Capacity Building for Farmers and Smallholder Business Organizations

The program recruited and trained 263 new business service providers during the year. This now takes

the total number of service providers working with the program to 882 and surpassing the target of 350

service providers providing additional services to farmers by end of Year 4.

During the year a total of 1,441 operators were trained by the Naivasha Dairy Training Institute (DTI)

through the facilitation of the program. Forty-four SBOs have achieved national certification and

currently enforce quality regulations on suppliers. At the same time, eight milk bulking centres for

Brookside and five bulking centres of NKCC have attained the national certification standards. This

therefore shows that the program has been able to achieve a total of 57 dairy enterprises that have met

the national certification standards against the target of 40 by the end of Year 4, and bettering the target

by 40 percent.

During this period, the program facilitated capacity building of 39,232 dairy farmers giving a total of

90,434 members trained since the beginning of the project. This shows that the project has achieved

72% of the target by end of Year 4. Program interventions focused on training dairy farmers to equip

them with the necessary technical skills to increase herd productivity and incomes.

During the third and fourth quarters of this reporting period, the program encouraged the development

and analysis of action plans for all the SBOs working with the project to be implemented in the fiscal

1KDSC CLIN year ends in April 30, however for KDSC program implementation reporting years follow the USAID FY structure

USAID KENYA DAIRY SECTOR COMPETITIVENESS PROGRAM 2

year of implementation. In this regard, the program contracted KIE consultants that facilitated the

development of bankable business plans in selected progressive SBOs in each of the Milk sheds. Financial

institutions have evaluated some of the business plans with an intention of funding some.

Technology Transfer

KDSC continued to promote uptake of dairy technology in all the milk sheds. During the period under

review, smallholder farmers, Kabete, Lessos, and Nyeri milk sheds purchased 1,943 chaff cutters. The

purchase and use of chaff cutters has contributed greatly in improving feed utilization

efficiency/reduction in feed wastage. Sixty-four cooperatives purchased computers for their daily use

with 29 of them having internet connections that have resulted in more efficient data management. The

Program facilitated the purchase of 141 digital weighing scales. The finalized industry-wide web-based

application has started serving as a complete dairy and livestock management information system for the

livestock industry. During the period under review, a total of 11,941 farmers have registered in the e-

dairy market place out of which 3,675 (30.8%) are women. At the same time, a total of 28 dairy

processing companies have registered and listed their products in the e-market place and SBOs,

veterinary centres, veterinary officers, AI service providers, banks and insurance companies are also

users of the e-portal.

In other areas, the program emphasized appropriate technology for energy production and natural

resource management, introducing biogas, fodder tree and shrub planting, and soil and water

management techniques. All biogas technology is being constructed using a cost sharing basis between

the client and the biogas project being implemented by KENFAP. A total of 616 biogas digesters were

installed in this period and the farmers whose biogas plants are complete reported that they were

satisfied with the work and the output of the same.

Milk Production

The program embarked on the improvement of the value of dairy cows for its members through an

animal registration program with the Kenya Livestock Breeders Organization (KLBO) and Kenya Stud

book. Service providers and collaborators registered a total of 12,193 dairy cows with the KBLO during

the period under review. During this period, KDSC strengthened the Dairy Traders Association (DTA)

so as to enhance quality milk consumption by the public. DTA has expanded its membership

tremendously in order to reach more members.

KDSC has contributed to the increase in cow productivity by 36.9% resulting into yields of 8.9

liters/cow/day during the year. This shows that the program has been able to achieve only 63.6% of the

target by the end of Year 4. In order to increase the competitiveness of the dairy sector, the program

has concentrated in activities that would result in reduction in cost of production: Program promoted

cost-cutting feeding regimes, including adoption of crop residue preservation, hay, silage, leguminous

fodder technologies (Lucerne, desmodium, caliandra), and own feed formulation (use of molasses and

microbes). These resulted in the reduction in cost of production by 20.4% against the 20% targeted of

the program in Year 4. The increase in cost of production in Year 4 compared to year three has been

occasioned by increase in price of animal feeds that was significant in this period.


Farmer and Smallholder Business Income

Results show that during the year, the gross margin reported by dairy farmers was KShs 10.05 which

shows an increase of over 100% as compared to the baseline values surpassing the target of 32% by the

end of Year 4. During the period under review, the program realized an improved income earned by the

primary producers in the project area. This was realized due to improved prices due to federation of

different SBOs, increased levels of productivity and availability of inputs by the service providers. The

income realized from dairy was Kshs. 5,199.65 per month during the period under review. This

cumulatively resulted in an increase of about 154% compared to baseline which has surpassed the target

value of 60% by the end of Year 4 of the project implementation. The increase can be attributed to the

increase in productivity and increase in average price as a result of project interventions. Increased use

of productivity-enhancing technologies, especially artificial insemination, has been realized among farmers

working with the program. Program data shows a marked increase in the proportion of farmers using AI

as reported by 87% as compared to the baseline proportion (39.9%). The adoption of technology was

low in the Kericho and Lessos as compared to other Milk sheds.

The program also facilitated the establishment of ten (10) new SBOs during the period under review

resulting into a total of 124 SBOs showing an achievement of over 100%.

Access to Financial Services

The program has embarked on linking farmers with financial institutions so as to enable them develop

their dairy enterprises. In this year, the KDSC team has introduced a total of 14,186 dairy farmers to

credit facilities. This gives us a total of 42,814 farmers already linked to credit facilities against a target of

36,000 by the end of Year 4 with 37% of them being women. A total of US$448,652 (KShs 39.03

million) was accessed by dairy farmers in the program area from financial service providers enabled

through program links.

Gender Access and Youth Participation

Program efforts to promote gender and youth advancement have registered positive results. Members

of Rugika Youth are dealing in fodder growing mostly napier. The group leaders expressed interest on

fodder conservation and selling of hay to farmers and the group participated in a farmer field day where

silage making was demonstrated. The main challenge for increasing youth involvement is their availability

as they are sparsely distributed in their activitie. In two milk sheds the program successfully launched

the youth football teamsa a way to bring youth together. During the team meetings, dairy matters are

discussed to induce the members into dairying as a business.

The program continues to emphasize gender access and involvement, especially when it comes to

decision-making. In Kitiri for example during the special delegates meeting attended by 71 members the

female representative were 14%. This has been reported as a milestone since meetings in this farmer

cooperative has been a preserve for male members only. The program helped mobilize women groups

in the milk shed who are now fully participating in dairy activities. Farmer Field School (FFS) and SBO

meetings are timed to avail women to participate having men and women agree on an appropriate time


(women have recommended morning or afternoon over early morning or late evenings times when they

often other commitments). This has been strictly adhered to in the planning of the FFS and SBOs

meetings.

Challenges

Program beneficiaries encountered a number of challenges during the year that KDSC worked to

facilitate responses or solutions. The main challenge reported was the disease outbreak. The program

responded by supporting training nine dip attendants from four dips in Nakuru milk shed. The trainings

conducted covered dip structure, types of acaricides, ticks, dip management by-laws, committee

elections, documentation, drug resistance and back up services of ultravetis.

Volatile milk market was also a challenge in the program area. The sudden lowering of prices by NKCC,

a major raw milk buyer, affected the performance of SBOs and reducing volumes of milk available, as

members opted to sell their milk to milk traders who were offering better prices.

Market distortion was also witnessed by the beneficiaries. Some development programs being

implemented in the program area continue to perpetuate dependency attitudes by paying farmers and

funding purchases or giving away inputs and dairy equipment.

Milk collection infrastructure has been poorly developed in the area. The program has continued to

advise farmers on the need to have their own cooling units in their SBOs. However, based on the

financial requirements, there has been a slow uptake of this aspect in the project area.

The approach of BDS that involves service providers as the main trainers has resulted into slow

dissemination of information to dairy farmers in some of the areas in which the project operate. Some

of the service providers have taken a longer time than expected to embrace farmer training as an

embedded service.

Lessons Learned

1. The organization of farmer groups into business organizations has enabled dairy producers to

increase their bargaining power with the processors.

2. Increased capacity building of service providers has resulted in increased sales of their products.

Linkages between service providers and farmer cooperatives facilitated by KDSC have enabled

farmers to invest in technologies like digital weighing scales, computerization, and biogas

equipment at affordable rates.

3. Though the performance of SBOs was negatively impacted when NKCC lowered the purchase

price, the price reduction only affected those without supply contracts. Accordingly it has

reinforced the importance of having supply contracts with processors, which can be best

facilitated through cooperatives.

4. The organization of farmer groups into business organizations has enabled dairy producers to

increase their bargaining power with the processors. The formation of federations has resulted

in increased milk prices at the farmer level and the same time qualifying of members for bonuses

given by processors.


2.0 Introduction and Objectives

Land O’Lakes is implementing the USAID Kenya Dairy Sector Competitiveness (KDSC) program with

the financial support of the United States Agency for International Development (USAID). KDSC is a

five-year program that aims to improve Kenya’s dairy industry competitiveness. Under this program,

Land O’Lakes employs a market-driven value chain approach, utilizing a business development services

(BDS) methodology. KDSC will help transform the Kenyan dairy industry into a globally competitive,

regional market leader, with the overall goal of increasing smallholder household income from the sale

of quality milk. Land O’Lakes is facilitating this transformation, while the industry stakeholders are

leading it.

The program objectives are three-fold:

Increase competitiveness of the Kenyan dairy sector through collaboration among sector

stakeholders and increased capacity of public sector agencies to serve the needs of the sector;

Increase marketing of milk meeting quality standards by producer-owned milk bulking/cooling

businesses; and

Enhance access to business development services and technologies.

In its implementation, the program pays particular attention to environmental and gender concerns and

effects corrective action as appropriate. KDSC takes into account the varying roles, assets, knowledge

and skills that men, women and youth bring to dairy farming. The program therefore facilitates the

implementation of opportunities for integrating youth and family members into dairy value-chain

economic activities.

Towards Strategic Objective 7

KDSC contributes to the USAID Strategic Objective 7.0 on ―Increased Rural Household Incomes.‖ The

program is implemented through a range of activities grouped into three broad components. The

components and the associated deliverables are:

Component 1: Enhanced Capacity for Milk and Production Input Quality Certification and Market

Promotion

Deliverables include:

Increased smallholder household income

Increased use of technology

Improve and enact industry policies and acts that enhance competitiveness

Develop and implement/enforce quality certification frameworks and work towards a graded

payment system

Dairy enterprises achieve national/international certifications and enforcing quality regulations

on suppliers

Increase feed marketed under new quality standards


Component 2: Dairy Smallholder Business Organization (SBO) Development

The key deliverables are:

Producer organizations strengthened.

Increased number of milk bulking centres (MBC) with Hazard Analysis and Critical Control

Points (HACCP) and /or SBOs with national certifications.

Increased raw milk sales by SBOs under agreements that pay premium for quality.

Increased gross revenue of milk bulking/cooling businesses from sale of inputs and services other

than milk.

Increased number of SBOs transformed into sustainable businesses entities.

Increased number of cooling units installed/rehabilitated by SBOs

Component 3: Availability of Dairy Business Development Services

Key outcomes/ impacts will include:

Enhanced range of business services to producers.

Increased value of services/inputs provided by business service providers.

Increased number of smallholders purchasing private sector services at full commercial rates.

New technologies or management practices made available for transfer.

Increased number of dairy farmers receiving loans from financial service providers.

Increased number of smallholders engaged in new, diversified dairy-related enterprises.

Increased number of dairy farmers receiving short-term training.

Implementation Strategy and Key Activities

KDSC is implemented using innovative, international best practice approaches and methodologies that

ensure achievement of expected results and sustainability of impacts long after the end of the program.

Using local service providers and facilitators, Land O’Lakes, the implementing agency, supports market-

based services/solutions, and action-oriented policy research to overcome both industry-level and

enterprise-level constraints to competitiveness at key points along the dairy value chain. Industry

stakeholders have since been engaged to been engaged to identify competitiveness constraints, and

propose solutions to these constraints.


3.0 Program Implementation

In the reporting period, the program continued to address challenges, constraints, and stakeholder

concerns for the dairy sector and realized significant achievements. Program efforts especially focused

on putting in place sustainable solutions to the challenge posed by increased milk production observed

during the reporting period. As reported in the previous quarterly reports, the country has been

experiencing increased supply of milk over and above the retailing capacity of the formal sector. This has

led to the stockpiling of processed milk products, especially long life milk and powdered milk. Formal

milk traders have responded by reducing farm gate prices—in some cases by close to 47% compared to

farm gate price last year. This has led to a number of farmers opting to sell to informal milk traders

though they were previously selling to the formal milk market through Smallholder Business

Organizations (SBOs). This has implications especially on sustaining the realized farm-level productivity

gains, on maintaining or growing household incomes (given the fluctuating/volatile manner of prices

offered and reduced farmer bargaining power), and on assuring consumer safety due to the unhygienic

manner in which some informal sector traders handle milk. To help solve this problem, the program

focused on identifying and operationalizing sustainable solutions by working with SBOs to negotiate

longer term contracts and supporting initiatives that would contribute to the expansion of both the

domestic and export markets.

In an effort to stabilize milk price across seasons, KDSC is also looking into alternative domestic

markets—both institutional and informal—for the SBOs working with the program. The program held

formal discussions with the Dairy Traders Association (DTA) in some milk sheds about market options,

especially in milk sheds close to non-milk producing areas and in main cities such as Kabete and

TransNzoia where the DTA account for a significant proportion of milk traded. To guard consumer

safety, the program is evaluating proposals from DTA such that will improve their organizational

capacity to train members on milk handling and hygiene. Once finalized, these SBOs will be able to

diversify their markets and realize stable returns across seasons for their members. Accordingly, these

SBOs should be able to grow their membership, and thus increase their bargaining power through

increased traded volumes.

Detailed activities and achievements during Year 4 are summarized below and are organized by program

component. KDSC facilitates interventions impacting the dairy sector in three components:

Activities that enhance the quality of inputs and products, including advocacy measures

and reviews of policy and standards;

Activities that build the capacity of smallholder business organizations and improve

farm-level productivity; and

Activities that aim to expand access and availability of business development services in

the sector.


3.1 Component One: Enhance Capacity for Milk Production Input, Quality

Certification, and Market Promotion

During the period under review, the program embarked on building the capacity of livestock genetics

suppliers for the dairy sector. Rhoteach consultancy firm was engaged to build capacity for genetics

suppliers in dairy sector following the formation of Kenya genetics association. Rhoteach undertook key

activities such as developing the standards for accreditation of AI service providers, creating linkages for

institutions offering refresher courses, building capacity of service providers to better communicate the

benefits of animal registration to farmers, identifying financial products that support AI service providers

and to defining action plans to improve performance of dairy breeding.

The program also engaged AHEAD consultants to build capacity of the feed manufacturers association.

A key output of their task was to link accredited AKEFEMA members with the SBOs working with the

program. AHEAD also helped AKEFEMA to develop accreditation procedures and assisted to ensure

that a minimum of 20 members are accredited. Other results included developing a code of practice

and creating a data bank of nutritional specifications based on local materials. The consultants trained

three feed manufacturers (Lens, Bunda, and Molaplus) and five SBO committee members in Nakuru milk

shed. The training topics covered the contractual agreements and dairy cow nutrition, focused on dairy

meal and quality parameters and. AHEAD consultants successfully completed their mandate of building

the capacity of the feed manufacturers association. A total of 20 feed companies signed the contract

with SBOs to effect the provision of high quality feed to members of those cooperatives.

An animal registration program began with KLBO and Kenya Stud Book (KSB) that aimed to increase

the value of dairy cows for its members. Due to the intervention measures promoted by the program

to increase the value of the dairy animals in the program area, KDSC service providers and

collaborators registered a total of 12,193 dairy cows with the Kenya Livestock Breeders Organization

during the period under review. This is envisaged to contribute in the upward valuation of the registered

dairy animals and result in a premium sales price when the animals are sold. In Lessos milk shed, KLBO

trained service providers on documentation procedures for basic cow registration documentation,

which will allow these trained service providers to complete cow registration forms on behalf of KSB

and to have the SBOs forward the forms to KSB for official registrations. Issuance of official registration

certificate to the concerned farmers as per their best practice standard has also been expedited. In

Gatanga milk shed, the program is working with the farmers using trainings to sensitize them on the

value of animal registration with the KSB and KLBO.

The KDSC program has strengthened the partnership with the Dairy Traders Association (DTA). DTA

is represented on the production and marketing sub-committee at the Dairy Task Force and at the Milk

shed Working Groups. These committees have been working actively throughout the year in order to

achieve the objective of producing and selling of high quality milk from the linked producers as well as all

those within the entire dairy value chain. During the year, the Milk shed Working Group (MWG) and

Animal Production Society of Kenya (APSK) organized a national symposium which was attended by

participants from all over the country and facilitated by the project in collaboration with other

stakeholders in the dairy industry. The event was launched by Mr. Ken Lusaka, Permanent Secretary,

Ministry of Livestock Development (MOLD) and Mr. Kiptarus, Director of Livestock Production. There


were presentations of scientific papers by researchers from MOLD and Kenya Agricultural Research

Institute (KARI). The milk analysis laboratory is operational and the personnel in charge of the unit are

working closely with MWG committees on quality and production and to collect samples to test for

butter fat and protein.

Figure 1: Director Livestock Production Mr. Kiptarus with his staff during an APSK field day at KARI Kitale

During the period under review, the Kenya Dairy Board ( KDB ) organized a massive campaign to

eliminate milk hawkers in Londiani Town and its environs in Kericho milk shed. This has had a

positive impact to Ruskebei Dairy which sells milk to the local consumers at a price of KShs. 30

($0.34) per litre. Consumers are assured that they are buying clean and quality milk because of the

milk testing procedures and cooling system operated by the society.

The program finalized the development of an industry-wide web-based application that serves as a

complete dairy and livestock management information system for the livestock industry. The application

has been able to provide an easy interface for initial and subsequent data collection and analysis. It has

also enabled and enhanced information sharing among stakeholders in the sector.

More details for selected Component One activities and outputs realized during the reporting period

follow below.

Milk Quality Improvement Program

The KDSC program interventions targeting milk quality improvement have included provision of

technical assistance in the review of dairy standards and facilitating training of KDB regulatory inspectors

on Pasteurized Milk Ordinance and Regulatory Inspection. The program has also helped expose the

inspectors to the American regulatory inspection systems, practices, and techniques especially the U.S.


Pasteurized Milk Ordinance which is seen as critical to ensure milk quality through the value chain.

Program efforts have also targeted developing and providing access to reader-friendly industry standards

and manuals in collaboration with the KDB and other stakeholders.

The KDSC link with DTA is also important on the production and marketing sub-committee at the

Dairy Task Force and at the Milk shed Working Groups. KDSC reinforced the agreement to share

information and undertake activities to improve the committees’ operations and performance. KDSC

has been in the forefront in promoting consumption of high quality milk in the country. During this

period, KDSC strengthened DTA so as to enhance quality milk consumption by the public. DTA has

expanded its membership tremendously in order to reach more members. Through the support of the

KDSC, there has been change in policies regulating the dairy sector. With commitment from all

stakeholders in the dairy industry, there has been a constant increase in membership of the DTA owing

to the new government directive that milk sales in municipalities was outlawed in January 2011. This has

contributed in having more members joining to benefit from the planned cottage pasteurizing unit that

DTA is planning to construct. The program has also agreed with officials on plans to capacity build DTA

on the requirements of a processing plant and to conduct a business analysis to assess the feasibility of

that venture. DTA membership has and is contributing capital for the venture in the amount of Kshs

2,000 ($22.99) per member. In this regard, KDSC project builds the capacity of farmers so that they

can own their own milk cooling plants within their localities after which the processors can be able to

collect the milk with minimum losses.

During this year under review, DTA has 200 registered traders with an average of 40 farmers each

giving a total of about 8,000 smallholder farmers within Nakuru milk shed that are contracted by the

DTAs. At the same time, Nakuru milk shed is exploring ways on how they can reach the smallholder

farmers working with the DTAs so that they can benefit from KDSC capacity building program.

Through the support of the KDSC, there has been change in policies regulating the dairy sector. In

Gatanga milk shed, members of the DTA continued to provide alternative market for the milk the

formal sector was unable to collect and process. However, it is noted that they offer unfair competition

because they are not strict with quality standards. This is one area that the MWG is working on.

DTAs have continued to offer competition to main processors especially during the dry season due to

milk deficit in Western Kenya. DTA paid up to Kshs 40 ($0.46) to farmers compared to a high of KShs

31 ($0.36) offered by New Kenya Cooperative Creameries (NKCC). The DTA marketed their milk at

KShs 60 ($0.69) per liter. A total of 1.88 million liters of milk was marketed in TransNzoia milk shed

through the DTA during the period under review. The association through the chairman requested to

be facilitated in training on quality and marketing in conjunction with KDB.

KDSC emphasized market expansion to cushion the impacts on supply and prices caused by increases in

milk production during the period. In order to produce high quality milk meeting the EAC Dairy

standards and other technical requirements as stipulated in the drafted dairy regulations particularly at

the farm level, farmers will incur additional costs in acquiring the appropriate milk handling containers,

enhancing hygiene, and organizing for quick milk delivery to the milk collection centres. However, the

benefits of improved milk quality are substantial and cannot be over emphasized. Kenya Dairy Board in


collaboration with stakeholders is therefore developing a framework plan of differential payments for

quality and planning a pilot trial-run in the coming months under guidance of a KDSC consultant.

The launch of the milk quality improvement program is the foundation for substantial improvement to

milk quality in Kenya. It will aid sector players to implement the basic requirements necessary for milk

hygiene that can ensure consumer safety and boost regional and international trade. It is particularly

important now that the East African Community (EAC) has adopted a free trade area, which is expected

to contribute to Kenya’s vision 2030 of halving poverty and/or improving income to the middle income

level.

Review of the Kenya Dairy Regulations

The program initiated an activity to review the proposed Kenya Dairy regulation and enable the

document be passed into law in the quickest possible timeline. This activity was initiated during this year

under review so as to make the established regulations already drafted by the program to become

effective after being passed into law. In this regard, ARC consultants was contracted and tasked to carry

out the activity during the period under review. The already drafted Kenya Dairy Regulations lay the

foundation for all the other components in our quality programme. The regulations describe the

requirements for production, storage, transportation and processing of milk and milk products along the

chain. The regulations also give technical specifications for processing equipment and quality surveillance.

Individual sections of the regulations deal with each link as the milk progresses from the cow to the

consumer. The new Dairy Regulations have been reviewed and approved by stakeholders. Adoption of

these detailed technical requirements represents a leap in technology and competence for our industry.

It is therefore expected that once the review of the draft is complete, the Dairy Regulations will be

legislated under the existing Kenya Dairy Act later during the next reporting period.

Increased Uptake of Technology

The program has continued to promote the uptake of appropriate agriculture mechanization and

information technology in all the milk sheds. During the period under review, a total of 1,943 chaff

cutters were purchased by smallholder farmers working with the project. A total of 1,098 chaff cutters

were bought in Kabete milk shed while Lessos and Nyeri bought 412 and 271 chaff cutters in that order

among others. The SBOs have come to appreciate the use of the pulveriser as dairy farmers from the

program area and purchase mainly from the SP Simba machinery who works also with the project.

Maina Mugi who is a Service Provider (SP) of Kitiri and also a demo farmer bought a chaff cutter and a

generator that has a water pump worth kshs 60,000 ($689.7) during this period. The purchase and use

of chaff cutters have contributed greatly in improving feed utilization efficiency/reduction in feed

wastage.

With regards to computerization, a total of 64 cooperatives purchased computers for their daily use

with 29 of them having internet connections which have managed to hasten data handling. The program

has planned sensitization of the SBO management on the need to move forward and install milk

cooperative business software available for easier handling of bulk data. Nine SBOs have installed coop

works in their systems. The manager of Kirichu dairy Ms. Rose Maina has been prompted to undergo a


course in computer packages sponsored by her cooperative. This is geared to assisting the dairy

cooperative to embrace computer technology to enable it manage information efficiently.

The Program facilitated the purchase of 148 digital weighing scales during the period under review.

Through adoption of digital weighing scales, the SBOs have managed to win farmers loyalty as they trust

the measurements used as being transparent unlike before. At the same time, a total of 3,301 aluminium

cans were bought by dairy farmers to enhance delivery of high quality milk. In this period also,

smallholder farmers in the cooperatives managed to purchase 372 lactometers.

During the period, the program has been in the forefront of improving the quality of milk through

promotion of value addition technologies. A total of 33 SBOs have started carrying out value addition in

milk and five SBOs are adding value in feed. In Lessos milk shed, three SBOs namely Bidii, Sugoi and

Kipsamo started value addition of their milk where by SBO members have started making cultured milk

(mala) and yoghurt of various fruit flavours. Another SBO (Seum cooperative) from TransNzoia milk

shed has embraced value addition of feeds through urea treatment technology. Over 300 bags of maize

stovers were ground for value addition and subsequent feeding to the animals, which improves their

condition and increases milk production. Training is being undertaken on relevant topics in dairy

production and management.

Figure 2: Mr. Misosi from Surungai receive a digital weighing from Mr. Pascal of KDB

Enhancing Milk Market through Facilitating Processor’s Capacity

During the year, the program undertook an activity geared toward improving the performance of Lari

Dairy Alliance LTD. This undertaking followed a request from Sundale processors to assist Lari Dairy

Alliance Ltd. (LDA) in turning around their milk processing business. After completing a diagnostic

workshop and issuing a request for proposals from qualified consultant firms, Corporative Consultant


Services (CCS) was identified to offer various business turnaround and capacity building foundational

services. If necessary, KDSC program will provide technical assistance for CCS during implementation

for a period of one year with possible renewal based on the performance. CCS has carried out the

study of the LDA and recommended initiatives that will enable in turning around the operations of the

dairy processing plant. CCS team also identified immediate strategies to be used as stop-gap measures

to keep the plant from becoming redundant. As an outcome, the firm facilitated the operations,

overseeing a steady supply of milk to the facility and issuing prompt payments to the primary producers.

The consultants also completed a long-term turnaround strategy and will likely request technical

assistance from the KDSC Kinangop team during the implementation and until LDA restores operations

to full capacity and optimum performance.

LDA Ltd. (Sundale) successfuly rolled-out a number of measures to improve operational efficiency,

including:

Reducing staff at the processing plant by 50% to reduce the cost of operations;

Installing a yoghurt batch pasteurizer that processes 5000L/day;

Installing a furnace oil boiler to replace an automatic diesel unit that will reduce energy cost by

90%; and

Offering rebranding and new packaging for the 500ml fresh milk pack product.

Development of Dairy and Livestock MIS (http://www.KDSCmis.com)

The program finalized the development of an industry-wide web-based application that will serve as a

complete dairy and livestock management information system for the livestock industry. The application

provides an easy interface for initial and subsequent data collection and analysis and enabling information

sharing among stakeholders in the sector. The system has modules for all the actors in the value chain:

farmers, farmer groups, processors, insurance and financial institutions, semen distributors, and animal

health providers among others. Industry stakeholders have been sensitized on benefits of industry site,

resulting requests for additional modules. Private breeders were the latest stakeholder group to request

their own module. This can help link the breeders to prospective customers throughout the country.

There is no exhaustive list of livestock breeders in the country at the moment. Program staff continue

working with farmers to register their details in the portal and prepare them for possible expansion of

their business opportunities.

Using the e-market place, the buyers would be able to search for and find the range of products and

services most relevant to them and also compare the prices. Buyers can also write testimonials for the

products and services or read testimonials written by other buyers. Buyers can visit the website of the

supplier through link provided on the supplier’s profile. The program facilitated the training of

coordinators from all eight milk sheds as well as AKEFEMA representatives that cover 70 feed

manufacturers.

During the period under review, an ―E-mailer‖ was sent to 200 relevant companies which include, feed

manufacturers, processors, AI suppliers, financial institutions. A bulk SMS campaign has been planned

for 5,000 Agro-Vet shops across Kenya (the database already available). Additional bulk SMS campaigns

http://www.kdscmis.com/


are planned for 5,000 relevant feed and agricultural product manufacturers (the database is currently

being built) and for over 1000 veterinary doctors, AI technicians, and possibly other stakeholders.

The finalized industry-wide web-based application has started serving as a complete dairy and livestock

management information system for the livestock industry. During the period under review, a total of

11,941 farmers have registered in the e-dairy market place out of which 3,675 (30.8%) are women. At

the same time, a total of 28 dairy processing companies have registered and listed their products in the

e-market place. Others in the e-portal include SBOs (70), Veterinary centres (4), Veterinary officers

(51), AI service providers (120), banks (45) and insurance companies (42).

The program is now initiating an evaluation of the e-dairy portal, which will assess the sustainability of

the web-based dairy portal, evaluate solutions for hosting of the system, and identify usage at cost-

effective level by all stakeholders. ANDEST BITES Ltd. was contracted to evaluate the performance of

the e-dairy portal and report the findings. During the upcoming quarter, ANDEST BITES will report the

findings of the evaluation to guide the industry to understand how to sustainably manage the system

after the exit of the KDSC program.

Collaborative Activities

The KDSC team collaborated with Kenya Dairy Board to organize the training of the Nakuru raw milk

traders on cottage milk processing and new business management skills. This was to help them survive

the new, January 2011, regulations that outlaw the sale of raw milk in municipalities. The team also

aided them to identify the appropriate equipment and negotiate for affordable prices.

The KDSC team has continued its collaborative work other stakeholders in the dairy sector. During

the month of March, the government officers in Nakuru milk shed supported the program as the

meetings were held in Mumberes, Ngorika, Tuungane and dip attendance in Koibatek. The training

involved good dairy practices and management of dips. The dip attendance meeting was conducted

together with a supplier, Cooper Kenya. The Ministry of Cooperatives have managed to conduct

election for Tuungane Cooperative Society and current management will undergo capacity building

training to fully understand their roles. KLBO has a memorandum with KDSC Lessos in which it was

agreed that KLBO will train the service providers contracted by the dairy farmers’ organizations

partnering with the KDSC Lessos milk shed. KDSC role is to mobilize the dairy farmers organizations

(SBOs) and help select and contract business service providers. KBLO trained service providers to play

the role of filling in cow registration forms on behalf of KSB and to have the SBOs forward the

completed forms to KSB for official registrations and issuance of official registration certificate to the

farmers. Animal registration and certification is a best practice standard. Kenya National Federation of

Agricultural Producers (KENFAP) and KDSC continue to popularize and facilitate famers’ access to

biogas technology. Farmers have been shown and have appreciated the benefits of biogas and many

more farmers are taking-up the technology, including direct beneficiaries of the project. All biogas

technology is constructed using a cost-sharing basis between the client and the bio gas project being

implemented by KENFAP.


Development of Bankable Business Plans

All the SBOs working with the program have developed action plans to be implemented in the fourth

year of the project. Each of these actions plans have been evaluated with the technical assistance

offered by KIE consultants, which was contracted by the project. In particular, KIE helped SBOs in each

of the milk sheds to prepare bankable business plans. About 50 percent of the actions plans developed

for SBOs are ‖bankable‖, with 54 business plans acceptable and presentable to financial institutions.

KIE itself, Family Bank, and a number of cooperative banks have started evaluating the business plans,

offering increased opportunities for funding in the coming year for the dairy sector.

Formation of North Rift AI Providers Group

KDSC facilitated the formation of North Rift AI providers group to enable efficient and coordinated

activities regarding the services offered by AI service providers in TransNzoia milk shed. The AI group

through the guidance of the program has continued to grow and greatly increase the total sale of semen.

In collaboration with KDSC MOLD, WWS, ABS, Pokea Farm and ADC, the group facilitated the official

launch of a distributorship that was attended by animal health technicians, AI technicians, and many

farmers.

Figure 3: Chairman North rift AI Project Chairman Mr. George Kamau addresses participants during the launch

Coordination of ESADA conference

In order to increase the volume of milk meeting the international standards, the program promotes

activities that enhance exchange of information and the use of technologies among the stakeholders in

the dairy sector. In this period, the program facilitated the attendance and participation of service


providers on cost-sharing basis at the ESADA conference. KDSC also participated in the conference and

facilitated preparation and capacity building of members attending the conference.

The project supported 16 organizations representing the entire dairy value chain to participate at the

7th African Dairy Conference and Exhibition. KDSC supported the exhibition space for the 16

companies to showcase their products and build trade relationships and contacts. The participating

companies applied, registered, and defined the space requirements. The 7th African Dairy Conference

and Exhibition provided a platform to benchmark and learn from leading dairy players, to promote

products and services, and to develop trade networks. This year the event was held in Dar es Salaam,

Tanzania in May with the theme ―African Dairy: The Next Dairy Frontier‖. The conference is an ideal

platform for showcasing modern dairy equipment and new technology and innovations, including animal

health supplies, milking systems, feeding products, forage handling, manure equipment, plus embryo,

semen, and genetic research.

During the event, leading dairy practitioners, scholars, technology suppliers among others presented on

various issues, emerging technologies and best practices around the world and industry success stories

among others at the conference sessions. There was one full day and two half day sessions covering the

topics that included: the World Dairy Status; Dairy Policies and Economics in Africa; Dairy Farming

(Animal Feeding and Breeding); and Dairy Science and Technology (Packaging and Processing). Other

areas covered were Milk Production (Quality, Quantity, Hygiene and Safety); Food Science for

Nutritional and Health; Dairying Dynamics, Animal Health and Farm Management; Dairy Marketing and

related dynamics; Industry Sustainability, Gender and Environment; and Cooperatives Management,

Value chain Efficiency and Building Competitive Edge in the Industry.

In order to have a good mix of players across the value chain, small-scale entities involved in the value

chain were identified. These include feed manufacturing, machine fabricators, animal medicines, AI

services and genetics and processors. Targeted companies were sent an email with information about

the upcoming event and there was a follow up of the email by a telephone call. For several companies a

physical visit to present the conference and exhibition proposal was necessary and also to collect the

signed forms.

The members who attended the exhibition provided feedback that the event should be planned in such a

way that there are more days to show dairy products and equipment. While at the same, there was an

outcry for more open days to better engage the public in the dairy industry. Many farmer and business

representatives, who attended the exhibition, reported that the event revealed trends and technologies

in the market that if they put into use would enable dairy farmers to improve their economic status. As

reported in Table 1, the exhibitors registered a good number of visitors during the three day event and

some of them recorded tremendous sales of their products and technologies.


Table 1: Exhibitors Sponsored by KDSC

Exhibitor Approximate

visitors to the

stand

Comments

1 ABS-TCM 180

2 Happy Cow Ltd 213 Good prospects for supply of cheese to

Tanzanian markets follow-up in progress

3 Coopers (K) Brands 178 Exact data not available from Tanzanian group

4 Sunbeam technologies 296 2 quality systems and other follow-ups in

Progress

5 NakuruSimba machinery 300 7 machines, 12 on follow-up, Lots of request to go do

demos again.

6 Bicycle Relief Organization 277 8 bicycles on follow-up

7 United Business Solutions

(UBS)

189 6 heavy duty scales; 11 light duty scales; 36 follow-ups

in progress

8 KLBO 242 Good contacts with leaders for farmers with

prospects of exporting cows

9 Livestock Genetics

Association

242 Good contacts

10 Embryo Transfer

Association

242 Channels open for later trade talks

11 Super sires 189 Good contacts

12 Desley Holdings 252 Good contacts

13 Worldwide sires 149 Good contacts

14 Sunpower products 152 Good contacts

15 Eldoville Farm 138 Good contacts

16 Sigma feeds 173 Good contacts

Figure 4: Kimani of Nakuru Simba Machinery receiving a certificate of attendance from the Minister for Livestock and

Fisheries Development, Tanzania


Market Promotion through Kenya Livestock Breeders Show/ASK Shows

The KDSC team continued its collaborative work with other stakeholders in the dairy sector. During

the period under review, the KDSC collaborated to organize the 2011 Kenya Livestock Breeders Show

and Sale. The event took place in June and had over 70 business exhibitors and over 60 livestock

exhibitors. As a way of encouraging farmers to attend the Livestock Breeders show, KDSC sponsored

farmers to attend the event, by paying entry fees for some dairy farmers working with the project. In

the eight milk sheds that KDSC operates efforts were made to encourage farmers to attend the show.

In other milk sheds farmer outreach was conducted through the Kenya Dairy Farmers Federations and

Milk Processors that operate in the areas.

Figure 5: KDSC Stand during Kenya Livestock Breeders Show

The Livestock Breeders show was well attended with over 10,000 farmers attending the show according

to the organizers. Over 2000 farmers visited the KDSC stand to learn about dairy-related issues.

Also during the program year, an exchange tour was organized by NKCC for dairy farmers from

Gatanga milk shed. Farmers visited Mr. Wilson Kyalo’s farm (Ivaini Farm) in Machakos and later to the

NKCC processing plant in Dandora. The processor sponsored farmers from Murang’a County who sell

milk to NKCC. The processor paid entry fees and the farmers met the transportation costs. The

participating farmers received training on animal breeding and management, bull selection, dairy cow

feeding, general dairy management, calf rearing, and dairy farming as a business. At the NKCC

processing plant farmers were able to see the various products that are processed in the plant and

control measures taken to ensure that end product is of high quality. Technicians from NKCC also

addressed farmers on Good Manufacturing Practices and urged farmers to be attentive to quality issues

at the farm and in handling milk. Farmers were informed that the industry is changing and the processor

is interested in negotiating and signing contracts on the basis of milk quality. The processor also

promised to provide one milk analyzer to be used at Kangema plant.


New Technologies or Management Practices under Research

In collaboration with other partner, KDSC has initiated a total of 11 new technologies under research

that can increase the productivity of dairy cows in the program area. In collaboration with KARI, the

program has begun researching application of various technologies including, molasses block, mastitis

kits, foot-and-mouth disease vaccines, and animal feeds such as lucerne, sorghum and multipurpose

potato vines. The other technologies under research with Kick-start involve water harvesting

technology, while Mola+ works on digestibility. Other research interventions are evaluating the use of

milk trailers (motorcycle) and use of mobile chaff-cutters powered by biogas.

3.2 Component 2: Develop Dairy Smallholder Business Organizations

In this component, the KDSC program continued linking small business organizations (SBOs) to inputs

and services to enable these organizations grow their businesses. During the period under review, the

program reached a total of 42,977 additional households resulting into a total of 248,275 households

having benefitted cumulatively. This shows that the project has reached 99% of the beneficiaries in this

period. The female members benefiting since the start of the program total to 109,241 that accounts for

44% of all beneficiaries. At the same time, the program facilitated the establishment of ten new SBOs

during the period, adding to a total of 124 producer organizations being strengthened over the life of

the program. Impacting this number of SBOs achieves 100% of the program target, which has been

possible due to high mobilizations by the facilitators. The intervention of the program in the entire

project area has recorded positive results.

The performance of Seum Dairy Cooperative Society is an indicator of uptake of the intervention

measures promoted by the project. The management committee of Seum Cooperative attended a

training organized by KDSC on milk bulking and marketing. The SBO benefits from being affiliated with

Cherengany Dairy Group because Cherengany pays milk bonuses to federated co-op members. KDSC

facilitated federation arrangement. The group is now providing AI and dipping services to the members

and none members are at a differential price scheme. Farmers from the Seum are adding value to maize

stovers by treating the same with urea and yeast and then feeding mix to the cows. As a result cows

are producing more milk and have better health condition especially during the dry period. Farmers have

embraced value-added activities for feed, using urea treatment technology and have ground and added-

value to over 300 bags of maize stovers. SBO members have joined training offered on relevant topics

in dairy production and management. Group members have purchased 20Kg of fodder yeast and 10

pieces of silage tubes to add value to maize stovers for feeding to their animals during this drought

period.

The success of Ichichi SBO in Gatanga milk shed has led to growth of business development services

related to dairy around Ichichi market. After the collapse of the Githambo dairy, many farmers

neglected dairy farming and thus greatly reducing the demand for dairy business services. However,

through the facilitation of the KDSC program, there are currently four agro-vets operating in the

market, who were not there before Ichichi dairy farmers formed the SBO. The program has also been

involved in farmer training in the area in the form of demonstrations and exchange visits. Exchange visits

have been very instrumental in changing many farmers’ way of feeding their animals. For example, a


group of 14 farmers who attended a Nairobi show where they learned about good dairy cow

management have experienced dramatic improvements in milk production after implementing practices

learned at event. One farmer who was producing 510 kgs of milk now gets 1570 kgs per month from

the same number of dairy cows. In fact, all farmers from the SBO deliver at least 10 litres of milk per

day to the dairy, with some producers delivering as much as 60 litres per day. Similarly, SBO member

dairy farmers who attended to another exchange visit in SabaSaba where maize silage was emphasized

have reported introducing maize crops for silage making purposes. Ichichi dairy farmers are also offered

a growing number of member services from their SBO. The group started by only collecting and

marketing milk, but in 2009 they were able to introduce feeds inputs for member, which are paid for

through check-off system. During recent quarter, they began offering AI and animal health services to

farmers via a check-off system.

Through the interaction with KDSC program the group has implemented improved recordkeeping for

the SBO after completing training offered by the program. They started with manual recordkeeping but

when the program sensitized the management on the use of computers to improve efficiency, the

manager started outsourcing computer services. This helped the group to reduce errors and time

required for preparing the records, especially for monthly payments. In recognition of the positive

results realized by the group, Personal Development Company donated a computer to the group. This

has further increased the group efficiency as the time for preparing farmer payment records now takes

only one day, when it previously it used to take five days. Computerization has also enabled payments to

farmers to be made different bank accounts as opposed to previously only paying farmers through

Muramati SACCO. The computer, which is fully equipped with the printer and modem, has also

reduced printing expenses because they their own printer, instead of paying an outside printer.

This has also been one of the SBOs that have shown tremendous improvement in performance in the

past year. The group sells its milk to New KCC through KIKAMA SBO and is currently collecting over

750 liters per day as compared to 100 litres per day previously collected in 2008. This increase has been

attributed to the various farmer trainings that KDSC has conducted, particularly exchange visits. It is

also seen as a result of better milk prices that KCC is offering compared to the recent past. Also milk

rejections have gone down due to improved milk handling practices, developed through the KDSC

training. The SBO also acquired a computer that is helping the SBO manage its data. It is now possible

to generate the daily and monthly statements more efficiently and with minimal labor. The group also

uses its computer to analyze business performance results on daily or monthly basis as well as per

farmer basis. SBO management are accessing training information management and how to use a

computer.

The group took out a loan in order to pay farmers’ for September milk deliveries, which the processor

had not paid up to date. The SBO has also had a slow start in LFFS which the manager attributed to

farmer sluggishness as result of the price events in the milk market. The increase in milk collection and

attendant decline in milk rejection has led to a significant improvement in overall performance and

earned the group a growing surplus. The KDSC program implements its activities in SBOs mainly

through trainings conducted by program staff. In order to reach more members, the program has

expanded its operations into new regions during the period. As shown in the photo below, the KDSC

has entered Marakwet region where dairy farmers have been introduced to dairy development


technologies that can make dairy production a profitable venture for farmers in the region. The program

therefore started training farmers on organizing milk bulking in the area. As a result farmers in

Marakwet have for the first time started bulking and selling milk cooperatively.

Figure 6: A section of the farmers who attended the milk bulking meeting held at Kimnai trading center on the 16th

November 2010 in Marakwet west.

Facilitated Working Linkages between Farmers the SBOs Working with the KDSC

The program continued providing information on input supply sources, linking producers with the

suppliers, linking businesses/enterprises to financial service providers, and helping SBOs and service

providers meet conditions to access credit. KSCP also provided market information and access to

business services and provided training and technical assistance to the producer groups. During the

period under review, a total of 263 SPs were linked with SBOs in the program area. This has been

achieved due to overwhelming response by the SPs to business opportunities presented by the dairy

sector. Due to the increased number of SPs there has been an increase in technological transfer and

increased purchases of dairy machinery, ICT accessories like digital weighing scales, computers,

pulverisers, and chaff cutters. The SPs have also contributed to the program’s increased number of

beneficiaries and delivery of training and technical assistance in the program area.

Market Access Services

KDSC continued delivering market information, facilitating market linkages, and supporting market

research for the producer groups working with program. The program engages cooperative members

with the aim of bringing together more members of different cooperatives under one organized unit and

enabling the groups to market bigger volumes of milk to processors that will entitle members to earn

bonuses. In TransNzoia milk shed, the program facilitated the formation a federation during this quarter.

The federation is proving successful and is bringing the farmers in the milk shed together.


In the process of improving market access of milk in the program area, the KDB participated in training

the SBOs on quality control and sensitized the SBOs on the importance of bulking in this period under

review. During the training, the KDB personnel stressed the importance of bulking milk in order to

improve their business. In TransNzoia milk shed, the chilling of milk is being compensated at Ksh1 per

liter by NKCC. KDB worked very closely with the KDSC in enhancing marketing cooperation between

the existing SBOs and Self Help Groups in order to come up with viable bulking units. During the period

under review, the KDB manager facilitated the formation of a federation between Iten (Keiyo gaa) and

Progressive Karona.

The impact of the project was realized during the period under review. From Lessos milk shed, the price

of milk reduced from Ksh 30 ($0.34) to KShs 23 ($0.26) for non-contracted farmers while farmers

working with the program under valid contract continued to enjoy the prices agreed with the

processors. This has been a good encouragement for those who had signed the contract. The impact of

federation was observed in Cherengany Dairy Group (CDG) during the month of March 2011. Even

though the production dropped to less than 10,000 litres a day, the prices remained constant at Ksh 31

($0.36) as their contract was reviewed after the intervention of the program. The Cherengany Group is

working closely with KDSC to ensure all the groups in TransNzoia federate with them to earn volume

bonuses and to eventually form a company to market the milk and later begin processing. A

stakeholder’s forum which met twice in the month concluded that CDG transform from a self-help

group to a cooperative and that a company be formed where all groups marketing milk or individuals

interested can buy shares. Surungai, Seum, Koitogos, Kipsaina, Meeboot, Naitiri and Tongaren are

marketing their milk through CDG and all earning better prices compared to others outside of the

federation.

Figure 7: TransNzoia Coordinator, Mr. Isaac Kamau explains breeding techniques to the Kenya’s Prime Minister, Raila

Odinga (with a hat)


Training and Technical Assistance

Through the technical assistance activities from KDSC, a total of 54 business plans were finalized during

this period and these will continue to guide the SBOs and were reviewed and revised by KIE to make

them more bankable. In light of this, some financial SPs are considering funding a number of the SBOs,

possibly using check-off system for repayment. The SBOs will also follow the business plans to guide

decision making, to determine the viability path, and to impact business transactions.

Input Supply Services

SBOs in the program are linked to input suppliers, equipment suppliers, and other service providers in

addition to milk bulking and cooling. The program facilitated the purchase of more pulveriser machines

by farmers in Marakwet through providers from Nakuru. The SBOs and members have come to

appreciate the use of the pulveriser, as the North Rift groups bought 300 machines from the SP Simba

Machinery.

Exploring an Alternative Aarket (Kabete Milk Shed)

In June a meeting was held between Kabete milk shed coordinator and Maziwa King Team who are

currently retailing 1,000 litres of pasteurized milk through on-site and mobile dispensers. Maziwa King is

also negotiating with Tuskys supermarket for a tender to supply 7,000 litres daily through the

supermarket’s established dispensers in Nairobi. They also plan to lease nine dispensers to traders help

establish a specialized dispenser milk re-filling and distribution business. The team is currently buying

from a pasteurizer at Ruai at a price of Ksh 36 per liter ($0.42). The facilitation team also met with a

dairy equipment dealer specializing in milk dispensers and pasteurizers, to better understand available

technology and prices. An innovation in dispensing equipment using a normal 50 ltr milk container for is

already been introduced to the Kenyan market. This equipment can be put in use at about half the price

(Kshs. 300,000 \ $3,529) of standard equipment thus making it affordable to dairy traders. The project

team is developing a sales model and a marketing solution that can be coordinated with industry

participants SBOs (suppliers), traders (buyers/retailers), financial institutions (financers) and transporters

(distributors).

Facilitated Capacity Building of over 39,232 Dairy Farmers in the Year

During this reporting period, the program facilitated capacity building of over 39,232 dairy farmers in the

period under review giving a total of 90,434 members trained since the beginning of the project. This

shows that the project has achieved 72% of the target by end of Year 4. Program interventions focused

on training dairy farmers to equip them with the necessary technical skills to increase herd productivity

and incomes. The training forums, organized in collaboration with key stakeholders such as private

service providers, Ministry of Livestock extension personnel, and Kenya Dairy Board (KDB) covered

diverse topics such as feed/fodder production, appropriate feeding regimes, feed conservation and

formulation, modern breeding techniques, and milk handling and hygiene. Other areas covered included

animal infertility, dairy as a business, and disease control. Trainings emphasize on-farm demonstration of


feed conservation techniques to enable smallholders conserve feed to stabilize milk yield and farmer

incomes.

In order to reach the maximum number of farmers in this period, a total of 234 livestock farmer field

schools (LFFS) were established. Each of these LFFS had averagely 25 members. At the same time, 136

demonstration farms were set up which enabled more members to be reached. Other members were

reached through field days and ASK shows.

The KDSC program requires private service providers to offer and deliver training to farmers. This, in-

part, has increased the challenge to deliver training to the targeted number of farmers. The majority of

service providers still do not see value in training farmers and expect to be paid by the program. The

service providers who understand and appreciate this model of extension provision have, however,

adopted the idea and are training farmers as part of business promotion. The second challenge has been

the low milk prices that have been prevailing locally since January of last year. Farmers have been

complaining of the low prices or even non-collection of milk by processors in some instances, and ask

why we want them to increase production when their milk will not be collected. This also has led to a

decreased number of farmers willing to attend program organized training events. Attitudes are,

however, changing with the slight increase in milk price and because of program efforts to identify

alternative markets and outlets for milk. The program has prioritized sensitization of farmers on the

benefits of joining organized societies like cooperatives and federations of SBOs and co-ops. Through

the formation of federations, some of the dairy farmers in TransNzoia milk shed joined Cherenganyi

federation consisting of Seum, Rongai, and Koitogos farmer cooperatives. In this federation, dairy

farmers have been able to negotiate the price of milk with NKCC processors from as low as KSh 24

($0.28) per litre to KShs 32 ($0.37) per litre for a volume of 7,500 litres per day. The contract remains

valid for the next six months.

Tulaga DFCS Goes Digital

Tulaga Dairy Farmers Cooperative Society was started in 1964 and has never closed its doors for its

members even though it has sometimes gone through tough financial conditions. In 1992, it had

experienced financial constraints until the staff had to work for three months without salary according

to the Manager, Mrs. MilkahThiong’o. By that time, the cooperative was only receiving 1300 litres of

milk per day and had no stores for dairy inputs.

Due to hard work and dedication of its management committee and staff, the cooperative currently has

9 stores across the catchment offering both animal products and human consumables. It has a total of

2100 active members delivering milk every day and collects milk from its members from their farm gate.

In this case, the coop hires donkey cats to collect milk from farm gates of their farmers to points where

the trucks can pick the milk.


Figure 8: MilkahThiong’o, Manager Tulaga DFCS using her IT compliant coop works

In terms of infrastructure, the cooperative has 2 trucks that help in transporting milk, a 5000L capacity

cooling tank and butter processing unit being installed. Tulaga has a total of 35 full time employees. It has

been able to collect a total of 13,500 L/day which shows a major improvement compared to when it

started. The main market for their milk is Brookside which collects their milk and pays at KShs 30

($0.34) per Litre of milk. This is based on the contract signed that pegs that price to milk delivered if

between 8,000-13,000L/day by the coop. The coop thereafter pays the farmers per liter of milk

delivered at KShs 25 ($0.29) which is relatively better than the prices offered by the hawkers in the

area. According to Milkah, the manager, Tulaga DFCS has been able to provide inputs and food stuff to

its members through check off system. Other benefits include school fees, NHIF, advances and stable

milk market. These have enhanced member loyalty to the cooperative society.

The other achievement that came out outstanding was the computerization of the Tulaga premises.

Through the partnership between the Government and FAO that funded the pilot of the IT, the coop

has benefited from this computerization that was done by coop works. The system consisting of a

server, four computers and two printers have been able to modernize the operations in the

cooperative. This has enhanced close monitoring of the activities and transactions in the coop, faster

decision making, reduced time for making payments to dairy farmers. Actually, all transactions and

accounting issues end by the last day of every month which makes payment possible as soon as possible

when the month ends. The system has inbuilt control mechanisms that minimizes fraud and time wasting

in decision making.

Activities to build the capacity of participating farmers have generated considerable benefits for farmers

in terms of improved productivity, lower cost of production, and improved margins. A summary of

impacts are presented below.

Cow Productivity

During the period under review, the KDSC has contributed to the increase in cow productivity. Results

show that the productivity has increased by 36.9% resulting into yields of 8.9 liters/cow/day during the

wet season. This shows that the program has been able to achieve only 63.6% of the target by the end

of Year 4 (14 litres/cow/day). Fifty percent of the milk sheds recorded productivity above the overall


mean. Kabete milk shed had the highest productivity of 12.9 litres/cow/day as compared to Kinangop

(11.3), Nyeri (9.4) and Gatanga (9.0) Litres/cow/day as reported in Table 2.

Table 2: Productivity of milk in the year 2011 in Lts/cow/day

Respondent Category

Mean Yield

2010 wet

season

Mean Yield

2010 dry

season

Average

yield in

2010 wet

season

Average

yield in 2011

Dry season

Average

yield in

2011

Wet

season

Mean

Year

2011

Baseline – August,

2008 6.5 6.5 6.5 6.5 6.5

6.5

Whole sample 7.9 8.1 8.0 8.2 9.6 8.9

Sex

Male 7.9 8.13 8.0 8.2 9.8 9.0

Female 7.4 7.89 7.6 8.3 9.4 8.9

Age of farmer

Youth 7.1 8.22 7.7 6.1 8.6 7.4

Above 30 years of age 7.8 8.06 7.9 8.2 10.6 9.4

Milk shed

Nyeri 8.0 7.01 7.5 7.2 11.5 9.4

Gatanga 7.18 8.05 7.6 7.5 10.5 9.0

Kabete 10.0 10.6 10.3 11.7 14.1 12.9

Lessos 8.3 11.16 9.7 10.7 6.8 8.8

Transnzoia 7.4 6.74 7.1 4.8 7.6 6.2

Kericho 6.8 5.54 6.2 6.1 6.3 6.2

Nakuru 7.0 7.91 7.5 7.1 7.9 7.5

Kinangop 8.1 8.08 8.1 10.8 11.8 11.3

Cost of Production

In order to increase the competitiveness of the dairy sector, the program emphasizes activities that can

result in a reduction in cost of production. For example, the program promoted cost-cutting feeding

regimes, including adoption of crop residue preservation, hay, silage, leguminous fodder technologies

(Lucerne, desmodium, caliandra), and own feed formulation (use of molasses and microbes). These

resulted in the reducing cost of production by 20.4% compared to the 20% reduction targeted by the

program in Year 4. As reported in Table 3 below, the cost of milk production was reduced to Kshs. 11.3

in the fourth year. The increase in cost of production in Year 4 compared to Year 3 has been

occasioned by an increase in the price of animal feeds that was significant in this period. This was

coupled with increase in inflation especially involving the agricultural sector that resulted in increased

prices of inputs. The adoption of the high crude protein and palatable Lucerne and Desmodium fodder

species have significantly reduced farmers reliance on expensive cereal-based commercial concentrates

such as dairy meal.


Table 3: Cost of production - 2011 and cumulative program figures in KShs/litre

Respondent Category

Cost of

production–

wet season

Cost of

production)-

dry season

Cost of

production

in 2010 wet season

Cost of

production in

2011 dry season

Cost of

production

in 2011 wet season

Mean

Year

2011

Baseline – August, 2008 Ksh. 14.20 14.20 14.20 14.20 14.20 14.2

Whole sample 9.90 11.10 10.5 10.3 12.2 11.3

Sex of household head

Male 9.70 10.80 10.3 9.6 11.9 10.8

Female 10.80 12.40 11.6 10.8 13.6 12.2

Age of farmer

Youth 6.50 8.80 7.7 7.6 9.4 8.5


Milk shed

Nyeri 15.80 14.96 15.4 15.1 17.8 16.5

Gatanga 12.40 12.00 12.2 12.3 13.4 12.9

Kabete 7.70 19.40 13.6 11.6 17.3 14.5

Lessos 7.40 7.6 7.5 7.4 9.0 8.2

Transnzoia 9.10 10.7 9.9 9.8 11.2 10.5

Kericho 11.40 5.50 8.5 8.7 9.0 8.9

Nakuru 9.60 9.20 9.4 9.2 11.9 10.6

Kinangop 6.50 10.6 8.6 7.9 10.5 9.2

Fodder Crop Usage

The usage of fodder crops has significantly improved during the period of project implementation. From

all dairy farmers interviewed, about 98% of them had established and were using fodder crops for their

dairy cows. During the period under review, the number of farmers with Desmodium increased to

10.7% in Year 4 as compared to 2.1% at baseline. Also as shown in Table 4 below, the use of maize

stovers as fodder increased 32.9% during the fourth year of the project as compared 2.7% in the first

year while lucerne grass increased from 3.7% to 5.3% during baseline and Year 4, respectively.

Table 4: Proportion of farmers establishing fodder crops/trees

Proportion (%)

of farmers

planting

Baselin

e (%)

2009

(%) 2010 (%)

2011

dry

season

(%)

2011 wet season

(%)

Cumulative

moving average

Napier 79.5 81.6 82.1 88.2 83.5 83.0

Desmodium 2.1 4.0 0.6 5.0 10.7 4.5

Rhodes grass 7.3 13.9 21.1 25.0 18.4 17.1

Lucerne 3.7 2.1 4.8 3.2 5.3 3.8

Fodder trees 2.1 1.3 1.9 6.5 4.9 3.3

Fodder sorghum 1.0 1.7 3.2 3.5 3.2 2.5

Caliandra trees 1.7 2.8 2.2 6.8 4.5 3.6

Oats 14.1 6.4 12.5 12.6 11.4

Fodder maize Na 2.7 4.2 6.0 32.9 11.5


Technology Transfer

The uptake of technology has been demonstrated in the program area regarding the use of maize

stovers as dairy feed. About 33% of the dairy farmers have adopted the use of maize as fodder crop with

majority being recorded in the expansive North Rift area especially in Lessos and TransNzoia Milk sheds

(Figure 9). This shows an improvement as compared to only 2.7% of farmers that reported using it in

the first year of the project. The program has observed a considerable rise in uptake of maize as a

fodder crop. Maize has strictly been regarded as human food in the country, especially in Rift valley. The

crop, however, is highly nutritious and makes better ensiling material than Napier grass, which is

commonly used.

Figure 9: Trend of uptake of fodder maize

Gross Margin for Dairy Farmers

Table 5 shows that during the year, the gross margin reported by dairy farmers was KShs. 10.05 which

shows an increase of over 100% as compared to the baseline values. This shows that the program has

surpassed the target of 32% by the end of Year 4.

Table 5: Gross Margins and household income: 2011 and cumulative program figures in Kshs/Liter

Respondent Category Gross Margin

-wet season

Gross

Margin-dray

season

Gross

Margin in

2010

Gross

Margin in

2011

Dry season

Gross

Margin in

2011

Wet season

Gross

Margin in

2011

Baseline – August, 2008 5.80 5.80 5.80 5.8 5.80

Whole sample 7.50 8.8 8.2 8.4 11.7 10.05

Sex

Male 7.70 9.1 8 8.7 12.4 10.55

Female 7.50 7.5 7.5 7.3 11.0 9.15

Age of farmer

Youth 9.60 11.16 10.4 5.8 13.8 9.8


Milk shed

Nyeri 4.80 3.04 3.9 11.4 2.8 7.1

Gatanga 4.50 7.60 6.1 7.6 15.7 11.65

Kabete 10.60 3.31 7.0 13.1 19.5 16.3

Lessos 12.20 13.7 13.0 10.6 14.0 12.3

Transnzoia 9.70 8.3 9.0 8.4 15.2 11.8

Kericho 4.0 14.3 9.2 9.8 10.2 10

Nakuru 6.20 10.1 8.2 3.4 8.9 6.15

Kinangop 8.30 9.44 8.9 7.0 7.5 7.25

2.7 4.2 6

32.9

0

5

10

15

20

25

30

35

2009 2010 2011a 2011b


Household Income

KDSC realized an improved income earned by the primary producers in the project area. This was

realized due to improved prices due to the federation of different SBOs, increased levels of productivity,

and improved availability of inputs by the service providers. As reported in Table 6, the income realized

from dairy was Kshs. 5,199.65 ($59.8) per month. This cumulatively resulted in an increase of about

154% compared to baseline which has surpassed the target value of 60% by the end of Year 4 of the

project implementation. The increase can be attributed to the increase in productivity and increase in

average price as a result of project interventions.

Table 6: Household income: 2011 and cumulative program figures (Kshs/Month)

Respondent

Category

Household

income

-wet season

Household

income-

dray

season

Househol

d

income in

2010

Household

income in

2011dry

season

Household

income in

2011 wet

season

Household

income in

2011

Baseline – August,

2008 2043

2043 2043 2043

Whole sample 4849.9 5338.7 5094.0 5032.6 5366.70 5199.65

Sex

Male 5206.2 5536.5 5371.4 5240.4 5697.00 5468.70

Female 3703.3 4596.8 4147.1 4201.4 4886.10 4543.75

Age of farmer

Youth 4535.6 5279.6 4907.6 1530.0 4351.20 2940.60


Milk shed

Nyeri 2369.7 1834.4 2102.1 5264.4 4004.40 4634.40

Gatanga 1708.7 3430.7 2569.7 1783.6 6291.00 4037.30

Kabete 8157.9 4231.4 6194.7 12313.4 12616.20 12464.80

Lessos 9024.7 10660.5 9842.7 4479.0 6494.40 5486.70

Transnzoia 6772.1 5569.9 6171.0 2718.8 4389.60 3554.20

Kericho 1426.8 5289.6 3358.2 3263.9 3720.00 3491.95

Nakuru 5326.9 6560.0 5943.5 2711.9 2767.50 2739.70

Kinangop 4220 5162.7 4691.5 5820.8 4915.50 5368.15

Artificial Insemination Adoption

Increased use of productivity-enhancing technologies, especially artificial insemination, has been realized

among farmers working with the program. Program data shows a marked increase in the proportion of

farmers using AI as reported by 87% as compared to the baseline proportion of 39.9% (see Table 7).

The adoption of technology was lower in the Kericho and Lessos as compared to other milk sheds.


Table 7: Artificial Insemination technology adoption in 2011

Respondent Category Technology adoption - AI (%)

Baseline 39.9

Whole sample 87.0

Sex of farmer

Male 85.5

Female 90.5

Age of farmer

Youth 89.0

Above 30 years of age 86.5

Milk shed

Nyeri 94.1

Gatanga 91.1

Kabete 90.4

Lessos 52.2

Transnzoia 78.6

Kericho 43.9

Nakuru 68.3

Kinangop 95.4

Beth Maina, Farm Manager, Reaches Dairy Farmers through Demo Plot

Mrs. Beth Maina is married to a service provider who works for Kitiri DFCS and provides clinical and AI

services to the co-op members. Beth is one of the members of Kitiri DFCS and has been outstanding in

managing dairy animals as far as the husband is concerned. She operates a demo farm in the area

alongside other four members in the cooperative to serve coop members. In their demo farm, there

were several types of dairy feeds found locally which include oats, lucern, maize, vegetables and carrots.

Alongside these, they also buy concentrates and supplements from the market to make sure that their

dairy cows get the right quantities of all ingredients required. At the same time, in order to prepare

feeds for their animals, she has a chaff cutter that cost her family KShs 60,000 ($705) to install fully.

In her farm, farmers normally attend trainings except that the major trainings were done in 2010 while

this year, there has only been few farmers coming for consultation about different issues regarding dairy

activities.


Figure 10: Beth Maina in her feed store on the right, while on the left is one of her dairy

cows registered

During the training sessions, farmers are always taken through different topics concerning dairy animals.

These include quality milk production; feed storage and management, calf rearing, breeding (judgment,

registration and classification); fodder conservation; business management and animal health

management. Some of the SPs used included animal health clinical officers, coopers, Norbrook and Osho

chemicals.

The lady has realized an increase in milk productivity over the last two years and attributes this to her

participation in trainings organized by KDSC. Her three dairy cows currently produce a total of 45

kg/day as compared to 20 kg/day before the project. Being members of Kitiri DFCS, they access ready

market for their milk, steady milk prices, and inputs available on credit and AI services whenever the

service is required. It was in her farm that we encountered all her dairy cows registered with KLBO and

Kenya stud book. This according to her has increased the value of her animals and therefore would

fetch higher prices as their origin could easily be traced. In fact, she offered that instead of disposing any

heifer born within her flock, she would rather dispose the older animals whose parenthood could not

easily be identified.

3.3 Component 3: Increase Availability of Dairy Business Development Services

The KDSC implementation method focuses on building capacity of BDS providers, i.e. switching from

assisting micro enterprises directly to ensuring sustainable access to services through functioning

markets. To achieve this objective, and for effectiveness, outreach, and impact, the program uses a

portfolio approach in provision of BDS. This entails working with multiple partners as BDS providers

rather than work with one or just a few and also the capacity building of the providers to provide a

range of services (with some embedded), rather than just one for increased effectiveness.

In the reporting period, the program recruited and trained 263 new business service providers. This

now takes the total number of service providers working with the program to 882. The program has

already surpassed the target of 350 service providers providing additional services to farmers by end of

Year 4 of program implementation. These experts work with and deliver productivity enhancing

technologies to specific farmer groups. Additional services provided to the dairy farmers include: feeds

and feeding, extension, cow registration, feed conservation especially silage making, among others. These

are provided after attending program facilitated capacity building workshops and seminars.

Program interventions on enterprise development have focused on:

Offering training on business and enterprise management, feed conservation, or refresher

courses on specific areas of expertise. KSDC has also provided service providers with manuals

and training modules, and exposed SPs to new business opportunities in dairy farming.

Linking financial service providers to BDS providers who need capital to expand their businesses

or increase efficiency of service. A number of artificial insemination providers have received


loans from Faulu Kenya, a micro finance agency, and bought motorcycles to expand their areas

of coverage and to reduce time lapse between when they are called and when they serve

farmers. As a result conception rates have improved for farmer’s livestock.

Facilitating interactions via platforms for communication and connection, between micro and

small enterprises and non-traditional financial service providers such as fund managers,

investments banks, and other development programmes to enable enterprises to access

innovative financial services and products that can be tailored to meet the their needs.

Contracting Feed Manufacturers by SBOs

In an effort to ensure farmers receive quality livestock feeds and feeds supplements, KDSC contracted

AHEAD Consultants (lead by Professors Gachuiri and Mbugua both of the University of Nairobi) to

facilitate signing of contracts between the SBOs and feed manufacturers. During the period under

review, the consultants facilitated the signing of 10 contracts with feed manufacturers that will ensure

that feed supplied to the SBOs are of high quality standards. These feed manufacturers are Limuru

Posho Mill Ltd., Light Ventures Industries, Lima Feeds Ltd., Phamerline Products Ltd., Nzuri Feeds

Supplies Ltd, Top Care Feeds, Pioneer Feeds Ltd., and Economy Farm Products. With successful

contracting of feed manufacturers, in the next reporting period the program will be able to outline the

number of farmers that utilize the quality feeds and which in effect will result in getting the value of

quality feeds purchased by the primary producers in the program area.

Formation of North Rift AI Providers Project (NRAIPP)

KDSC champions the uptake of AI technology in all the milk shed as part of a campaign to improve the

genetics of existing dairy animals that will ultimately result into improved milk productivity. The

expansion of AI services has been facilitated by the SPs with positive results. Each quarter during the

year, an increased number of farmers acquired AI technology in the milk shed. Because of the market

interest, AI technicians joined together and formed North Rift AI Provider’s Project which was officially

launched in March. The launch was attended by animal health technicians, AI technician’s farmers and

other guests who were received training on genomics and operating a successful AI business. These

service providers work with farmer groups and deliver productivity enhancing technologies. Because

the supply relationship is established, additional services or information can be added and offered to the

dairy farmers including, feed, extension information, cow registration, and feed conservation practices

such as silage making. These are attributes are provided after attending capacity building workshops and

seminars facilitated by the program.


Figure 11: Dr Odhiambo addresses technicians during the launch of NORAIPP

Financial Services to SPs and SBOs

During the year, KDSC introduced a total of 14,186 dairy farmers to credit facilities, resulting in a

cumulative total of 42,814 farmers, 37% of whom are women, already linked to credit facilities

compared to a Year 4 cumulative target of 36,000. As of the end of Year 4, the program has surpassed

the target by about 19%. The program has also made strides to inform dairy farmers about on the

availability of such services and build their understanding about about financial products. In Kinangop

milk shed, the program invited the director of K-LIFT, Dr Kiniiya, to present to Tulaga FCS on the

criteria for making loans accessible to dairy farmers in cooperatives by using a system where loan

repayment is through check-off system.. Five members of Tulaga bought forms to apply for funding. K-

LIFT also promised to train service providers on how to assist applicants in completing a loan request

proposal. These services are expected to provide more financial assistance to co-op members at an

affordable rate and enabling them expand their dairy activities. As shown in Table 8, during the period

under review, a total of US$448,652 (KShs. 39.03 million) was accessed by dairy farmers in the program

area from financial service providers that was enabled through linkages with financial institutions.


Table 8: Summary of beneficiaries accessing loans during year 4

Milk shed SBO Amount (KShs) Source of Funds Beneficiaries

Male Female

Kinangop Kitiri FC Society 1,500,000 ILO 17 35

Wanjohi FC

Society

1,000,000 CO-OP Bank 212 98

Miharati F C Society 4,000,000 CDTF/SBO 331 131

TransNzoia MEEBOOT 2,059,700 Equity/Kilioma

biashara/family

86 30

Tongaren 1,666,990 SACCO 110 87

Tarakwa 496,000 SACCO 17 6

Cherengany 1,660,000 Coop/Equity/Maziwa

loan (NKCC)

1922 856

Koitogos 40,000 10 11

Lessos AINABKOI 560,000 SACCO 67 45

KIPCHAMOO 1,200,000 EQUITY 92 132

KAMNO 300,000 COOPERATIVE 31 20

SINGALO 200,000 EQUITY,COOP 22 12

LELWAK 200,000 EQUITY 15 10

BIDII 600,000 EQUITY 32 16

MOIBEN 150,000 EQUITY,KCB 12 5

KARONA 300,000 EQUITY,COOP 40 22

TUIYO 200,000 FAMILY 20 12

TIMBORUA 800,000 EQUITY 67 45

SUGOI 400,000 KCB,NATIONAL 15 10

MEGUN 300,000 FAMILY 45 0

Nyeri 21,400,000 2630 1653

Total KShs. 39,032,690 8977 5209

USD USD448,652

Service Provider Display their Technologies at Kenya Livestock Breeders Show

The Livestock Breeders Show was attended by more than 10,000 farmers according to the organizers.

Over 2,000 dairy farmers visited the KDSC stand during the breeders show. Analyses of respondents

to a feedback survey of attendees indicate that about 70% of those who attended the show were male

whereas the rest were female. This compares similarly to other findings relating to women participation

in dairy where women participation is generally 25 percent in membership, trainings, and meetings as

well as in leadership and decision making structures.

KDSC hosted a demonstration and information stand to showcase various Business Service Providers

offering services and products to the livestock industry. The SPs who displayed their products and

businesses included, Nakuru Simba Machineries, Sharva Stores Limited, United Business Solutions,

Ebrahim Electronics, ASL Heavy Fabrication Division, Kengap Publishers and Rhino Park Dairy Resource


Centre Karen. SPs presented small machines for forage chopping and grinding which are sold at prices

affordable to small-scale farmers. SPs also demonstrated practices that use high-quality molasses for

feed mixing and silage making and offered training farmers on aspects of silage making, using above-

ground silage bag technology. United Business Solutions and Ebrahim electronics displayed digital milk

weighing machines, including both 50kg and 30 kg scales. The demand for digital scales was high and the

suppliers soldout of the units available during the show. ASL Heavy Fabrication Division, which

fabricates various milk processing machines, displayed its 1,000 liter milk chilling tank and its 50 liter

aluminum milk can products. The company sales and technical personnel were available to explain

various aspects of milk chilling at either a cooperative or farmer level. Rhino Park Dairy Resource

Centre Karen demonstrated adding value to milk at the farm-level, displaying various flavors of yogurt

products. Nakuru Simba Machineries specializes in selling small machines for forage chopping and

grinding. Their equipment has relatively low purchase price and low operating cost, which made the

machines attractive and affordable to small scale farmers. The manufacturer periodically demonstrated

the machines in action and in the process showed the chopping of dry fodder and silage as shown in the

Figure 12 below.

Figure 12: Service Providers showing dairy farmers how to operate a chaff cutter

Kenya Livestock Breeders Organization (KLBO) Grading

KLBO organizes and operates the breeders show and the organization felt that it was important to

survey participants to get the opinions of farmers about services offered by KLBO. Overall 8 percent of

respondents rated the services and offerings of KLBO as very good, 21percent as good, 19 percent as

fair, 16 percent as poor, while 35 percent felt the services were non-existent in their areas. The

responses varied from milk shed to milk shed. The organization was highly rated by Kericho at 20%

followed by Kabete with 17%. Gatanga milk shed stood out as the milk shed with the highest

respondents (64 percent) indicating that the KLBO services were non-existent. The same respondents

were also asked to state the factors which prevent them from accessing KLBO services, such as

livestock registration offered by the Kenya Stud Book and milk recording services offered by the Dairy

Recording services of Kenya. In their response farmers indicated that cost was not a factor in their


inability to access the services rather the other factors ranging from lack of awareness to poor delivery

of services prevents them from accessing the services.

Figure 13: Dairy farmers in the KDSC stand during the Breeders show

The farmer feedback questionnaires offer important lessons that need to be addressed by parties

concerned and covered across many fields. The area of animal registration and recording stand out as an

areas warranting strong intervention, as did the area of AI. Information about animal nutrition came out

as an area farmers benefited from during the show and more information targeting this area should be

availed to the farmers by extension agents. The challenge with disseminating of such information to

farmers is the ability of farmers to implement. The milk shed coordinators and facilitators should work

hand-in- hand to help farmers with the implementation of ideas gathered during the show. The feedback

report should also be availed to the show organizers to help them improve the future shows. On the

whole the show enabled many farmers to showcase some of the best of the Kenyan livestock and the

latest dairy information in a commendable way and lived up to the standards it has been reputed for.


Figure 14: Dairy farmer showing his dairy cows during the show

During the period under review, several SPs in Gatanga milk shed attended farmers’ Education day and

made presentations on the services they were offering to the farmers. 198 farmers turned up and were

addressed by the following SPs: Cooperative Bank, Murata SACCO, Cooperative Insurance Company,

Nakuru Simba Machineries, Mr Francis Kamande a contracted biogas SP from KENFAP, and Bajowa Feed

Manufactures from Kahuro. In Kangema the program established a working relationship with Welfare

Pharmacy, a large drug store in Kangema that sells both human and animal medications. Another contact

has been established in Maragwa with Dr. Irungu Mwangi a veterinary surgeon who operates an Agro-

Vet shop in the same place. These are fully registered business entities serving many farmers in the area

and therefore reliable SPs to work with the program.

3.4 Environmental Degradation Mitigation Measures

Activities to mitigate farm management practices—farm, service providers and at bulking centre level—

that may result in environmental degradation were emphasized in the year. The KDSC program

encouraged program beneficiaries to work towards sustainable management practices that reduce soil

erosion, soil and water pollution, and emissions to safeguard the sectors’ future contribution to national

economic growth. This is in recognition of the fact that agriculture is and will be (in the short to

medium term) the mainstay of Kenya’s economy.

With respect to mitigating environmental degradation, during farmer trainings on disease control,

emphasis were put on proper pesticide (cans) waste disposal through incineration or dumping in pit

latrines to protect the environment. Drug withdrawal periods have been emphasized to be observed

especially for mastitis cases. The project also trained dip attendants and included the safe disposal of


acaricide wastes and waste containers as a key part of the training curriculum. In other areas, biogas and

fodder tree and shrubs establishment to check on soil and water management were emphasized.

KDSC encourages farmers to prepare multipurpose trees and shrubs to be transplanted during the dry

season. A tree nursery in Kipsaina has been identified to supply the seedlings and seeds to farms during

the planting season.

Kenya National Federation of Agricultural Producers (KENFAP) and KDSC continue to promote biogas

technology within targeted milk sheds. Farmers have shown and appreciated the importance of biogas

and many farmers are adopting the technology, including direct beneficiaries of the project. All biogas

technology is being constructed using a cost-sharing basis between the client and the KENFAP biogas

project. A total of 616 biogas digesters were installed in this period. Farmers whose biogas plants are

complete and operational reported that they were satisfied with the work and the output.

During the period under review, a biogas seminar was held in Gatanga milk shed with an objective of

promoting the use of biogas as an alternative source of energy for household and commercial purposes.

The program also went on to promote the KENFAP biogas program (KENDBIP) which is giving farmers

subsidies. This was done during LFFS sessions. Use of bio-fuel stoves is also being promoted.

3.5 Gender and Youth intervention

Program efforts to promote gender and youth involvement in the dairy sector have registered positive

results. Members of Rugika Youth are dealing in fodder growing mostly napier. The group leaders

expressed interest on fodder conservation and selling of hay to farmers and attended the Kikuyu field

day where silage making was being trained. The main challenge of the youth is their availability as they

are sparsely distributed in their activities and the project has to work creatively to reachout to youth.

Figure 15:) Figure 16: Farmers during the launching of a biogas plant at Mr.Gichukis Farm (Gatangamilk shed)


In TransNzoia milk shed, the program has successfully launched the youth football team at Taito

JamiiTimaa and now has launched another youth group at Taito as an intervention to bring youth

together. The JamiiTimaa football team has now been registered with the ministry of social services.

During the team meetings, dairy matters are discussed to induce the members into dairying as a

business.

Gender is a factor the program continues to emphasize, especially when it comes to decision-making

process. In Kitiri for example during the special delegates meeting attended by 71 members, 14 percent

of the representatives were female. This is considered a milestone since meetings in this farmer

cooperative has been a preserve for male members only.

The program mobilizes women groups in the milk shed and facilitates them to fully participate in dairy

activities. The Kitale women initiative is an appreciated part of the program in which they coordinate

groups of women who are already participating in dairy farming and who are willing to join the already

existing SBOs within the milk shed. Pursuant to gender roles, all the project meetings and the FFS that

were being conducted in the quarter have been tailored to match with appropriate times as agreed upon

by the members both men and women. Women in particular prefer morning or afternoon, not early

morning or late evening times when they have other commitments. This scheduling idea has been

strictly adhered to for planning the FFS and SBOs meetings. In Lessos milk shed, the program has

observed that fewer women are being trained at the FFS, and it is attributed to the fact that owner and

manager of the dairy cows are the male in the family. The program has had to mobilize women to

attend such meetings although counter to cultural norm where men attend these type of meetings. As a

result of the special campaign, there has been some progress in Lessos and more women are coming to

LFFS.

KDSC Captures the Attention of Timothy Timor

Mr. Timothy Timor, a committee member of Surungai Dairy group, is a former truck driver who has

fully ventured into dairy farming. At the age of 33, Timothy is married with two children. Before

venturing into dairy farming, Timothy was a driver

of transit vehicles for several years an experience

that took him to all the East African countries

namely: Uganda and Tanzania and also to Sudan,

Rwanda and the Democratic Republic of Congo.

Come 2002, he bought a farm and three animals

and left to be managed by his workers who did

not have much experience in animal management.

―For several years, none of the animals served

with AI straws, conceived and this frustrated us

very much forcing us to eventually return to

natural mating using bulls, which greatly affected

the quality of the animals‖, he explains.

―I eventually left the driving job in 2008 and

decided take over the management of the farm to

ensure we generate enough income to help me and sustain my family. After l took over the

Timothy Timor standing in his farm compound


management of the farm, we were lucky because the following year the KDSC program came to

TransNzoia and our group of Surungai Dairy was among the first to sign a contract to work with it.

Since joining the program in 2009, I have greatly benefited from the trainings, workshop, and seminars

that the program organized and facilitated. As a result, over the last two years I have made enough

silage for my animals and have established a forage pasture planted with 2 acres of BomaRodes and 2

acres with Napier. The program also identified my farm as a demonstration farm that can used by the

program to train other farmers,‖ Timothy explains..

When asked about his vision, Timothy responded emphatically that it is dairy business and nothing else.

―I now have 25 animals and of the few we are milking, with the intervention of the program, we have

seen the volume of milk increase from 20 litres to 40 litres per day. ―I want to thank the KDSC

program for the impact they have made in our lives and would like to encourage all dairy farmers to

appreciate training and give personal attention to their animals. If they do, they will definitely see

results‖. He stresses identifying impacts of interventions that have been promoted by the program.

3.6 Challenges

During the period under review, there were several challenges that were encountered by the

beneficiaries of KDSC program.

Livestock Disease

The main challenge reported was the disease outbreak. The program area registered an outbreak of

foot-and-mouth disease in three program milk sheds, namely Trans Nzoia, Nakuru and Kabete. The

program worked closely with Ministry of Livestock Development personnel and suppliers of animal

health products on this issue. However, due the gravity of the disease outbreak, a number of planned

events were suspended, especially livestock farmer field days. Because of the impact of the disease in

these milk sheds, the program introduced a strategy of linking dairy cooperatives under the milk shed to

agro-vets to facilitate the vaccination of their animals against foot- and-mouth disease. The program also

recruited and trained nine dip attendants from four dips in Nakuru milk shed. The trainings conducted

covered dip structure, types of acaricides, ticks, dip management by-laws, committee elections,

documentation, drug resistance and back-up services of ultravetis. During the same period, a total of 64

dips were utilized in Lessos milk shed and a total of 25,074 animals on average were dipped every

month.

Volatile Milk Market

Another challenge faced by the dairy sector during the period has been the inability of the milk

processors to absorb the volume of milk produced by farmers, leading to non-collection of milk in some

cases, low milk prices and delayed farmer payments. Kitiri and Tulaga FCS in Kinangop milk shed

experienced high levels of milk rejection from the Brooke Side collection point and at Engineer

collection centre. Apart from tactics to delay receiving milk in good time, the collectors seemed to keep

altering the standards. Kitiri and other SBOs have started consulting on how they can alleviate this

problem and they feel they need to come up with a farmers processing plant to address the problem.


The sudden lowering of prices by NKCC, a major raw milk buyer has affected the performance of

SBO’S as some members opted to sell their milk to milk traders who were offering better prices. Milk

volumes handled at SBOs were accordingly lower. However, the price reduction only affected those

without supply contracts and thus has helped in reinforcing the importance of having supply contracts.

The lack of steady market for the milk and over reliance on the processors is still a big challenge for

small producers. NKCC reduced the prices of milk from Kshs. 25 ($0.3125) to Kshs. 23($0.2875) per

litre. NKCC also temporarily halted the signing of new milk supplier contracts, obstructing the progress

of the TMSG from forging ahead with the bulking process. KDSC liaised with the outgoing NKCC Kitale

Plant Manager and successfully re-opened the negotiations with the head office.

Market Distortion

Some development programs operating in the program areas by other implementers continue to

perpetuate dependency attitudes by paying farmers directly, funding purchases for beneficiaries, or by

giving away inputs and dairy equipment. Some stakeholders, accordingly, still expect payments from

KDSC to even attend capacity building sessions and some service providers demand payment to train

farmers. The program has put in place measures to address this challenge through capacity building of

the dairy farmers. KDSC uses an approach in which farmers who are members of the dairy societies

make contributions in order to acquire cooling plants from their milk proceeds. At the same time, the

program has established a mechanism in which dairy farmers are linked directly to service providers.

The SPs offer services and inputs to these farmers and payments are often made through a check-off

system on behalf of the farmers by the processors. This has enabled members to understand that

whenever they want to access any service, it is they who bear the cost.

Milk Collection Infrastructure

The program advises farmers on the need to have their own cooling units in their SBOs. However,

because of financial requirements, there has been a slow uptake of this aspect in the project area.

Members of some of the SBOs have been able to contribute toward cooling equipment and the SBOs

have managed to purchase cooling units. However, a majority of the cooperatives still have not been

successful in accessing this infrastructure. To address this challenge, the program is involving other

development partners including the government and banks to provide financial assistance. A

constituency development fund has been utilized in some of the areas while at the same time, the

program has linked SBOs with financial institutions in order to acquire loans. The program has also

contributed by providing technical assistance to the cooperatives towards the development of viable and

bankable business plans that can expedite the loan processing.

Methodology

The approach of BDS which involves service providers as the main trainers has resulted into slow

dissemination of information to dairy farmers in some of the areas. Some service providers have taken a

longer time than expected to embrace farmer training as an embedded service because training does not

provide direct economic returns on investment by the SPs. As noted above, some SPs have been


seeking for payment before delivering any training. The program has continued to build the capacity of

SPs on the benefits of including training as a component of the services they deliver to dairy farmers.

3.7 Lessons Learned

The organization of farmer groups into business organizations has enabled dairy producers to increase

their bargaining power with the processors. The formation of federations has resulted in increased milk

prices at the farmer level and the same time qualifying of members for bonuses given by processors.

Increased capacity building of service providers has resulted in increased sales of their products.

Through the linkages facilitated by KDSC program between service providers and farmer cooperatives

have enabled farmers to invest in technologies like digital weighing scales, computerization and biogas

equipment at affordable rate. This has led to realization of the objectives of the program in enhancing

development of small business organizations.

Sudden lowering of prices by NKCC, a major raw milk buyer has affected the performance of SBO’S by

members opting to sell their milk to milk traders who offer better prices hence affecting the volumes.

However, since the price reduction only affected those without supply contracts, it has reinforced the

importance of having Supply Contracts with processors which can only be facilitated through

cooperatives.

The organization of farmer groups into business organizations has enabled dairy producers to increase

their bargaining power with the processors. The formation of federations has resulted in increased milk

prices at the farmer level and the same time qualifying of members for bonuses given by processors.

Increased capacity building of service providers has resulted in increased sales of their products.

Through the linkages facilitated by KDSC program between service providers and farmer cooperatives

have enabled farmers to invest in technologies like digital weighing scales, computerization and biogas

equipment at affordable rate. This has led to realization of the objectives of the program in enhancing

development of small business organizations.

Collaboration with other agencies has yielded positive results for the program. There has been

continuous use of engagement of other stakeholders in the industry which has culminated into reaching

out to many dairy farmers with range of benefits. Some of the stakeholders include FHI, KDB, DTA and

ministry of livestock development.


3.8 Work plan for Year 4 – Quarter 1

Table 9: Work plan for Year 4 – Quarter 1

Year 4

No. Quarter Q 1 Anticipated Outcomes

Month 10 11 12

1.0 Component One – Enhance capacity for milk production

input quality certification and market promotion

Activity 1.1 Strengthen the Kenya Dairy Sector

Competitiveness Task Force and Donor Working Group on

Competitiveness

1.1.1 Hold Implementers Working Group Meeting x Synergy and leveraging funds

1.1.2 Hold Task Force Meetings x x Minutes, action plan initiatives

implemented

1.1.3

Provide support to the Dairy Task force on subcommittees and

regional working group coordination. Capacity building on

consensus building

x x Minutes and action plans

implemented

Activity 1.2 Identify and Mobilize Resources to Implement

Action Plans

1.2.1 Prioritize Action Plan initiatives x Posted on the KDSC/KDB

websites

1.2.2 Meet with stakeholders and donors to mobilize funding for high

priority initiatives e.g. (dairy animal census)

x $ 20 million Leveraged

1.2.3 Implement Action Plan solutions x x x All prioritized action plans

implemented

Activity 1.3 Develop Quality Standards and Support Policy

Reform Initiatives

1.3.1 Sensitize Dairy stakeholders on the reviewed key Policy Reform

initiatives as part of the accomplishment of the Action Plan

x x 4 stakeholders workshops Held at

National or Regional level

1.3.4 KDSC team will facilitate the Task force to Promote differential

payment for quality

x x x Quality certification framework

developed, promoted and

implemented

1.3.5

KDSC team will continue to work closely with

Laboratories/AKFEMA to build capacity of members (LTA 20

days)

x x x 30% increase in quantity feed

marketed under new feed quality

standards

1.3.6 Publicize policy briefs semi annually x Policy briefs developed and

uploaded on the website

1.3.9

Continue to promote the Data Base of service providers with

raw milk testing instrumentation for MCCs and develop a

sustainable way of acquisition

x Populate the Farmer and livestock

Portal and promote the portal

1.3.1

0 Capacity building of Laboratories

x Sensitization of Laboratories on

the benefits of International

accreditation and capacity building

towards accreditation with 17025

certification

Activity 1.4 Promote Market Expansion of Milk and Value-

Added Dairy Products

1.4.1 KDSC team will support industry-led quality promotions via

Action Plan

x x Generic consumption campaigns

1.4.2 KDSC team will pursue the dissemination and implementation of

the Master plan (TA 20 days)

x Activities stream lining the Dairy

sector

1.4.3 Support School Milk Program initiatives x Over 500 schools / 10 processors

participating

Activity 1.5 Facilitate Institutional and Association Capacity

Building

1.5.1 Use competitive grants directed at local firms to provide

technical assistance to dairy related institutions and associations

x x x Improved performance of at least

20 Dairy related supported


institutions

2.0 2.0 Component Two - Develop Dairy Smallholder

Business Organizations (SBOs)

Activity 2.1 Identify Smallholder Business Organizations

(SBOs) for KDSC Interventions

2.1.2 Cooling plants installed or rehabilitated x x 15 additional Cooling units

installed and or rehabilitated

2.1.3 Catalogue Milk Shed information on the KDSC Website x Increased efficiency and

production of milk

Activity 2.2 Technical Assistance and Capacity building to

SBOs

2.2.1 Strengthen businesses and management skills of SBOs x x x All SBOs strengthened. Increased

SBOs operational efficiency

2.2.2 Strengthen linkages between SBOs, processors and SPs x x x 40% increase in production and

returns on high quality milk

Activity 2.3 Promote Solutions and Create SBO Business

Plans and Milk shed Action Plans

2.3.1 Facilitate Business Plans for targeted SBOs

x x x 50 additional SBOs transformed

into substantial business entities

above the break-even point

2.3.2 Present Final SBO Assessment to Milk shed Action Planning

Workshops and form Milk shed Task Forces

x At least 20 milk shed working

group meetings held and Minutes

received

Activity 2.4 Promote Embedded Services within Dairy SBOs

and Processors

2.4.1 Capacity building of the revived Kenya Dairy processors

Association

x x x Functioning KDPA continuing with

semi annual meetings and supporting Members

2.4.2 Assist selected milk sheds to pilot new services

x x x 20% increase in gross revenue of

milk bulking centers businesses

from sale of input and services

other than milk cooling

2.4.3 Assist processors to deliver embedded services for SBOs

x x At least 5 additional and 10

existing Processors offering

Embedded services

2.4.4 Develop SBO operational and service provision best practices

and post on KDSC website

x SBO operational and SP best

practices documented and shared

Activity 2.5 Encourage Quality-Based Systems and Contracts

2.5.5 Link processors and SBOs to quality certification and assurance

providers as well as financial service providers

x 30 additional MBCs with HACCP

and or National certification

Activity 2.6 Coordinate and Leverage Resources for SBO

Development Initiatives

x x x $ 20 million Leveraged

3.0 3.0 Component Three - Increase Availability of Dairy

Business Development Services

Activity 3.1 Identify Enterprise level BDS constraints and

opportunities

3.1.1 Needs assessment for news BDSP x 100 additional BDSP supported

and Linked to Beneficiaries

3.1.2 Capacity building of existing and new BSPS x 200 BSPs will continue to be

supported

Activity 3.2. Needs analysis for Dairy Industry BSPs

3.2.1 Conduct an OCA for Processors x 5 additional processors

3.2.2 Capacity Building of processors x Capacity building of 5 additional

processors

Activity 3.3 Promote Accreditation of and Standards for

Dairy Service Providers

3.3.1 Identify and promote best accreditation practices and service

standards

x x 10% increase in Value of

services/inputs provided by BSPs

Activity 3.4 Create Directory of Business Services Providers

for Dairy Industry


3.4.1 Continue to Solicit BSP corporate capability statements

x x x Directory of the Livestock and

famers uploaded in the e-portal

with enterprises providing

business services and producers

3.4.2 Continue to Confirm legal registration of BSP created and added

to the directory

x x x A growing Data base shared with

stakeholders

3.4.3

KDSC team will populate BSP directory database and make

directory public via project and Dairy Market Information

websites

x x x 100,000 small holders purchasing

private sector services at full

commercial rates

Activity 3.5 Forge Business-to-Business Linkages

3.5.1 Conduct Business Solutions events in targeted milk sheds such as

Gender and youth sensitization awareness campaigns

x x x 216000 small holder farmers

engaged in new, diversified dairy

related enterprises as a result of

KDSC interventions

Activity 3.7 Build Capacity of BDS Facilitators

3.7.1 Develop and disseminate BDS delivery of specialized services to

SBOs, SPs and institutions

x 5 Specialized services delivered to

SBOs/BDSP or institutions

3.7.2 Capacity Building of Facilitators

x x 4 Facilitators supported with skills

on Technical development related

to program activities

3.7.3 Facilitate complex BDS services through Competitive Sub-awards

x 100,000 Dairy Farmers receiving

short term training (30% being

women)

Activity 3.8 Stimulate Value Chain Financing

3.8.1

Support MFIs/SACCOs to develop innovative financial services/

products

x 20,000 additional farmers receiving

loans from Financial service

providers (30% being women)

3.8.2 Facilitate development of innovative financial services through

Competitive Sub-awards

x 5 Financial products developed

Activity 3.9 Build Capacity of New and Existing Business

Services Providers

3.9.1 Train BSPs and smallholders /SBOs

x 11 new technologies or

management practices made

available for transfer to additional SBOs/SPSs


4.0 Performance Data Table

Impacts

Performance Indicator

Baseline

Value

(2008)

Year 4

Cumulative/

progressive Actual

Comments

Cumulative

Annual

Target

Actual (FY

2010/11)

Household level impacts

Increase in smallholder

household income (%)

2043 60% 154% 150% Current estimates indicate that

farmer incomes from the sale of

milk increased to Kshs. 5,199.65

per month on average in the year.

Program cumulative average

realized so far is 150%, surpassing

the program target of 60% in Year

4.

Number of rural

households benefiting

(Number)

0 250,000 42,977 248,275 A considerable number of farmers

still sell to hawkers due ready

market. However, there has been

an increase in coop membership

due to improved prices through

federation activities in Lessos and

TransNzoia milk sheds. Of all

active members of the SBOs,

women account for 44.6%.

Sub-Sector Level Impacts

Total volume of milk

purchased from

smallholder dairy farmers

(MT )

316,980.3 360,980.3 468,155.5 468,155.5

A considerable increase in

volumes sold by farmers was

observed in the year. This

increase can be attributed to

increases in yield resulting from

farmers adopting program-

promoted productivity enhancing

technologies with the onset of

rains. The value also increased

due to improvement of milk

prices through federation

activities

Total value of milk

purchased from

smallholder dairy farmers

(US Dollar)

83.8M 95.4M 123.8M 123.8M

Total volume of exports to

regional and international

markets (MT)

17,500 22,300 36.6 Million

MT

36.6 Million MT This data is reported one year

later. There has been an increase

in export due to increased

production of high quality milk

through adoption of standards. Total value of exports to

regional and international

markets (US Dollar)

14.32 M 11.17M 15.3M 15.3M

% change in volume of milk

conforming to quality

standards increased (%)

96.25% 80% 95.5% 95%

There has been tremendous

reduction in quantity of milk

rejected with majority of milk

sheds having zero volume

reported as rejects. This has been

occasioned by promotion of the

production of high quality milk

under the project.

Total value of milk

conforming to quality

standards increased (US Dollar)

96.25% 80% 95% 95%


Impacts


Baseline

Value

(2008)

Year 4

Cumulative/

progressive Actual

Comments

Cumulative

Annual

Target

Actual (FY

2010/11)

% change in volume of milk

and dairy products sold by

processors

398,637

MT 13% 30%

(518,228

MT)

30% Volume of milk sold through the

value chain has been rising

continuously over the four years

of program operation. % change in value of milk/

dairy products sold by

processors (Percent)

106.3M

US$ 10% 28%

(US$136M )

28%

Number of jobs created in

the value chain (Number)

0 30,000 3,263 14,627 There are jobs resulting from

investment in embedded service provision by SBOs & new business

development providers in the

entire dairy value chain

Firm level impacts

Number of producers

accessing/ receiving/

utilizing BDS services,

inputs, technologies, and management practices

0 180,000 43,722 198,988 Program has linked all farmer

groups with service providers in

the 8 milk sheds. The provision of

embedded services has resulted in increased number of active

membership in the SBOs.

Farmers using improved

technology increased

(Number)

39.9% 150,000 41,441 141,422

KDSC use farmers using AI to

inform this indicator. All farmers

however use some form of

program promoted technologies – all have reported conserving

feeds; 98% have established

fodder and 70.1% use AI among

other technologies.

Increase in productivity of

milk per cow/day (Lt)

Kshs. 6.4 14 8.9 8.4

A significant proportion of

farmers working with the program

registered gains in yields way above the sample average,

Increase in gross margin

per Lt of milk (Percent)

Kshs. 5.8 32 73.3 48.9

There has been an impressive

growth in profit margins in

Kericho milk shed due to low

costs involved in purchasing of

feeds. The program has also

contributed in increasing the productivity and better milk

prices.

Reduction in cost of

production - farm gate (%)

Kshs. 14.2 12 20.4 23.4

The onset of rains has greatly

helped reduce cost of production

due to abundant forage. Average

production cost has reduced cumulatively to Kshs. 11.3 per

liter.

Component 1 - Enhance Capacity for Milk and Production Input Quality Certification and Market Promotion

Number of industry

policies improved/enacted

0 2 0 21 Program has been recognized by

the MOLD in its facilitation that


Impacts


Baseline

Value

(2008)

Year 4

Cumulative/

progressive Actual

Comments

Cumulative

Annual

Target

Actual (FY

2010/11)

Number of quality

certification frameworks

(milk product, animal

feeds) developed,

implemented/enforced

0 2 0 1 led to the development of the

Dairy Master Plan.

Dairy draft regulations developed

by the project is undergoing

review by legal professional so as

to make it acceptable by the

government.

Kenya livestock policy has been

published for consideration by the

government

Total Value of non-project

resources leveraged

(US$)

$0 $20M 0.26M 25.52M These funds have been provided

by farmers own contribution,

government through constituency

development fund (CDF) and

other MFIs that give loans t

beneficiaries

Increased revenue

collected by KDB (%)

US$ 1.066M 30% 50% 37.5% Volume of milk sold through the

value chain has been rising

continuously over the years of

program operation. An increase

due to cess and levies charged on

processors

Component 2 - Dairy Smallholder Business Organization (SBO) Development

Number of producer

organizations

strengthened

0 100 10 124 During year 4, ten new SBOs

joined the program due to

improved milk prices and

embedded services promoted by

the program

Number of SBOs/MBCs

with HACCP and/or

national certification

0 40 69 69 SBOs that have business plans

implemented together with those

whose management attended

training on quality issues have

acquired national certification.

Processors have also achieved this

certification in their milk chilling

plants.

Increased gross revenue

of SBO/MBCs from sale of

inputs and services other

than milk cooling

82,500 30% 137% 137% Some SBOs have embarked on

production of high quality feeds

for their members as well as

provision of embedded services

Number of SBO/MBCs

transformed into

sustainable business

entities

0 100 10 124 All SBOs working with the

program operate profitably,

according to the official audit

reports and the profit and loss

accounts that are done on a

monthly basis.


Impacts


Baseline

Value

(2008)

Year 4

Cumulative/

progressive Actual

Comments

Cumulative

Annual

Target

Actual (FY

2010/11)

Number of cooling units

installed/rehabilitated in

SBO/MBCs (Number)

0 25 6 20 6 coolers were rehabilitated in the

year.

Component 3 - Availability of Dairy Business Development Services

Number of firms

providing new business services to producers

(Number)

0 350 263 882 Program activities have focused

on embedded service provision to increase the sales volume and

revenues for the providers. All

SPs working with the program

now provide farmer extension

services as an embedded service.

Number of smallholders

(gender of HH head, age) purchasing private sector

services at full commercial

rates (number)

0 100,000 45,665 146,299 Increased use of productivity-

enhancing technologies, especially artificial insemination, has been

realized among farmers working

with the program. Program data

shows a marked increase in the

proportion of farmers using AI (at

70.1%) compared to the baseline

proportion (39.9%).

New

technologies/management

practices made available

for transfer (Number)

0 25 0 24 New technologies still under

research in collaboration with

KARI

Dairy farmers receiving

loans from financial service providers

0 36,000 14,186 42,814 Private AI service providers and

SBOs working with the program have benefitted from program

linkages with financial service

providers. About 37% of those

receiving loans were women.

Number of producers

receiving short-term

training

0 126,000 39,232 90,434 Farmers especially in TransNzoia

demand trainings hence have

shown some improvements for the program. Other areas still

carry out a lot of mobilization in

order to reach more members

wit trainings.


5.0 Budget Execution


6.0 Annexes


Annex 1: Processors registered in the e-portal

No Name Address Town Products

1 Farmers Milk Processors

Ltd P. O. Box 744 Kericho Pasteurised Milk, Mala, Yoghurt & Butter

2 Bio Food Products Ltd P. O. Box 27623-

00506 Nairobi F&N Yoghurt, S/Flavoured, Sterilised, Cream

3 Spin Knit Dairy Ltd P. O. Box 78377 Nakuru UHT,Fresh Milk,Butter,Yoghurt,Ghee,Mala,F/Milk

4 Brookside Dairy Ltd P. O. Box 236 Ruiru Pasteurised Milk, Mala, Yoghurt, Cream, Butter

5 Githunguri D. F. C.

Processing Plant P. O. Box 3 Githunguri Yoghurt, Fresh Pasteurised Milk, Mala & Butter

6 Limuru Milk Processors P.O. Box 563 Limuru Fresh Milk, Butter, Ghee, Lala & Yoghurt

7 Kilifi Plantation Ltd Private Bag Kilifi Pasteurised Milk, Fermented Milk, Cream

8 Afrodane Food Industries Afrodane Food

Industries Nairobi Pasteurised Milk, Mala, Yoghurt, Butter & Ghee

9 Sunpower Products P. O. Box 41112 Nairobi Cheese, Cultured Milk, Ice Cream

10 Doinyo Lessos Ltd P. O. Box 169 Eldoret Femented Milk, Cheese, Yoghurt

11 Eldoville Farm Ltd P. O. Box 24390 Nairobi Whole Milk, Yoghurt, Cream, Cheese

12 Sidik Hussein Miyanji T/A

Miyanji Dairy P. O. Box 84381 Mombasa Fresh Milk, Yoghurt & Mala

13 New K.C.C. - Kitale

Factory Private Bag Kitale

P/Milk,Butter,Ghee,Skim & Full Cream, Powder

Milk

14 Greenlands Dairy Ltd P. O. Box 1373 Limuru Pasteurised Milk

15 Adarsh Developers Ltd P. O. Box 318-

00600 Nairobi Fresh Milk, Yoghurt, Butter, Ghee & Cheese

16 Happy Cow Ltd P. O. Box 558 Nakuru Cheese, Yoghurt, Fresh Milk & Mala

17 Egerton University P. O. Box 536 Njoro Yoghurt

18 Lari Dairy Alliance Ltd P. O. Box 208 Uplands Pasteurised Milk, Yoghurt, Maziwa Lala & Ghee

19 Kabianga Dairy Ltd P. O. Box 1595 Kericho Fresh Milk, Mala, Ghee, Butter & Cheese

20 Meru Central Dairy

Coopeative Unit P. O. Box 2919 Meru

Fresh Milk, Mala,Yoghurt,UHT,Ghee,Cream &

Butter

21 New K.C.C Eldoret New K.C.C Eldoret

Eldoret Fresh Milk & Milk Powder

22 Kinangop Dairy P. O. Box 429 North

Kinangop Fresh Milk, Mala & Yoghurt

23 Kinyaga Food Processing

Plant

P. O. Box 54039-

00200 Nairobi 0722-397883

24 Kabiyet Agro & General

Enterprises Ltd P. O. Box 1902 Eldoret UHT & Pasteurised Milk

25 P. N. K. Gaitara T/A

Pamside Dairy Ltd P. O. Box 745 020-2319874 Pasteurised Milk, Yoghurt & Mala

26 Tambul Dairies Ltd P. O. Box 2889 Nakuru Pasteurised Milk & Yoghurt

27 Ruba Mills Ltd P. O. Box 102 Eldoret Pasteusided milk, Mala, Yoghurt

28 Pasteusided milk, Mala,

Yoghurt Box 14345 00800 Uplands Whole milk, Butter, Yoghurt, Ice cream


Annex 2: Recognition for participating in Dairy Master Plan


Annex 3: List of beneficiaries of KDSC Program

Active members

of SBOs with

MoU with KDSC

Active

members of

SBOs with

MoU with

KDSC (2009)

Active

members of

SBOs with

MoU with

KDSC (2010)

Active

members of

SBOs with

MoU with

KDSC (2011)

New

beneficiari

es (2010)

New

beneficiaries

(2011)

Farmers

reached via

other milk

shed

interventions

Milk shed

Kikuyu 1380 382 400 0 0

237

Kabete

Gikambura 127 153 200 26 47

Sigona 40 43 46 3 3

Muguga N/A 163 215 163 52

Nderi 1022 52 36 0

Gatundu 200 120 0

Thanduka N/A 80 80

Limuru 6000 5950 3800 0

Bibilioni N/A 57 57

Kabete N/A N/A 650 N/A 650

Ndumberi N/A N/A 2300 N/A 2300

Kiambaa N/A 1700 1700

Kiganjo 3000 N/A 0

Hexagon Self Help

Group 230 N/A 0

MIK 4000 2,000 2,110 0 0

9313

Nyeri

Othaya Dairy 2000 2000 1797 0

Ihururu Dairy

Farmers 1200 1230 1176 30

Wakulima 9000 7000 7001 0 1

Tetu Dairy 8090 700 787 0 0

Kirichu Coop N/A 350 351 350 1

New Tetu N/A 1,230 1,306 1,230 76

Ngukurani Farmers 256 700 765 444 65

Gakindu Dairy 500 700 1097 200 397

Island 313 N/A 0

Ainabkoi 616 820 1098 204 278 10113

Lessos

Cheptiret N/A 654 2000 654 1346

Kipchamoo 800 820 1218 20 398

Kipsamoo 2000 2000 2000 0

Emgwen 15 N/A 0

Kamno 143 615 700 472 85

Singalo N/A 460 2000 460 1540

Lelwak 200 310 500 110 190

Ligwai/Bidii N/A 913 1000 913 87


Baitany/Tinderet N/A 3520 4000 3520 480

Kaptumo N/A 241 269 241 28

Moiben N/A 822 600 822

Progressi N/A 420 1500 420 1080

Tuiyo N/A 210 1200 210 990

Megun Gaa N/A N/A 1000 1000

Angwan N/A N/A 500 500

Onesmus N/A N/A 4895 4895

Timborua N/A 165 600 165 435

Iten N/A 54 500 54 446

Sugoi N/A 435 1000 435 565

Baharini N/A 200 200

New Nginda 800 1700 1700 900

17700

Gatanga

Thakumi 550 1100 1600 550 500

Umoja N/A 800 1386 800 586

Boyo 1070 1600 1600 530

Kahuro N/A 750 1000 750 250

Wanjengi 400 850 920 450 70

Ichichi 800 320 350 0 30

Abedare East SHG N/A 520 520

kagaki 400 400

samuka 1000

Kirere 1500 3500 2000

Sagawa N/A 320 320

Kikama N/A 1560 4000 1560 2440

Gika FSCS 1056 N/A 0

Sakuma DSHG 980 N/A 0

Mugi Elite Dairy 147 N/A 0

Kagundu-ini-farmers 18 N/A 0

Gaturi Kamacharia

FCS 600 N/A 0

Magomano DFCS 250 N/A 0

Kitiri 450 1050 1260 600 210 17730

Kinangop

Tulaga 2800 1846 1708 0

Dairymen 400 270 153 0

Mununga Kianda N/A 230 230

Miharati 1350 410 578 0 168


Wanjohi 470 310 310 0

Gikara N/A 200 200

Karati N/A 200 280 200 80

South Kinangop N/A 120 270 120 150

Lari 250 185 87 0

Gatamaiyu 2900 2100 2195 0 95

Kamahia 1970 514 160 0

Olaragwai N/A 98 98

Muki 3829 3829

Kiriita FCS 3050 N/A 0

Nyambini FCS 260 N/A 0

Njoro 202 222 519 20 297

10549

Nakuru

Mumberes N/A 674 1224 674 550

Kiplombe 978 450 1436 0 986

Mogotio 400 765 1026 365 261

kiptoim 300 450 894 150 444

Suka 360 500 702 140 202

Sabatia 2400 N/A 0

Molo 100 60 777 0 717

Ngorika 390 180 618 0 438

Molele N/A 45 45

Mauche N/A 150 150

Mutungati FCS 370 N/A 0

Torongo 2443 2443

Sigoro 446 446

Tuungane 684 684

Ngarua 668 668

Marmanet 468 468

Tukame 496 496

Boiman 352 352

Kinamba 193 193

Tulwobmoi 40 N/A 0

Tongaren 400 307 2949 0 2642 9081

Trans Nzoia

Bamwai N/A 114 118 114 4

Wamuini milk bar 55 112 281 57 169

Taito N/A 619 1028 619 409

Tarakwa 57 330 666 273 336

Meeboot 46 245 552 199 307


Surungai 32 106 155 74 49

Seum 40 95 105 55 10

Naitiri 120 880 1081 760 201

Koitogos N/A 89 350 89 261

Kipsombe N/A 296 296

Cherangany N/A 1,967 2,355 1967 388

Moi’ Bridge 6000 2,300 2,315 0 15

Marakwet NA 3350 6167 3350 2817

Teachers N/A 1,500 1500

Ruskebei N/A 24 1893 24 1869

10998

Kericho

Sotik Umoja N/A 1000 989 1000

Kabianga 176 307 2108 131 1801

Sotik Dairy Farmers 162 127 269 0 142

Tenwek 287 212 502 0 290

Mogogosiek 24 138 799 114 661

Ketengeret FCS 176 N/A 0

Sosiot FCS 50 N/A 0

Mutarakwa farmers 20 N/A 0

Kipangenge FCS 200 N/A 0

Longisa FCS 53 N/A 0

Chemosu Dairies 28 N/A 0

Chesilyot SHG 32 N/A 0

Gelegele FCS 66 N/A 0

Mosop FCS 1500 N/A 2185 0 685

Londiani FCS 63 N/A 0

Cheborgei FCS 1500 N/A 0

Total 79,830 75,436 115,216 35,177 49,444 85,721


U.S. Agency for International Development

USAID/Kenya Mission

C/O American Embassy

UN Avenue, Gigiri

Nairobi, Kenya

Tel: +254-20-862 2000

Fax: +254-20-862 2680 / 2681 / 2682

www.usaid.gov/ke

http://www.usaid.gov/ke

kenya dairy sector competitiveness program (kdscp) annual report_2011

Documents